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Oops, Something Else Broke

So steepening the yield curve probably isn’t such a hot idea even if it’s only 12 bps thus far:

And the US Treasuries are watching 10’s being sold, 2’s being bought up:

IF the 2’s to 10’s spread continues to a -0.50% spread (20 plus more points or so from here) or narrower, the steepening will mark the beginning of a severe tightening of the financial conditions along with an expansion of monetary inflation resulting in higher CPI/PCE later this year.

Good job boys, good job.

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  1. Bustednuckles Bustednuckles 03/12/2023


    Breaking news from the LA Times.

    All Silicon Valley Bank customers’ funds guaranteed, U.S. government says



    MARCH 12, 2023 UPDATED 4:45 PM PT

    The U.S. government took extraordinary steps Sunday to stop a potential banking crisis after the historic failure of Silicon Valley Bank, assuring depositors at the failed financial institution that they would be able to access all of their money quickly.

    The announcement came hours before trading began in Asia and amid fears that the factors behind the Santa Clara lender’s collapse could spread. Regulators had worked all weekend to come up with a buyer, and those efforts appeared to have failed as of Sunday.


    Column: The Silicon Valley Bank collapse is Silicon Valley’s problem, not yours

    March 10, 2023

    In a sign of how quickly the financial bleeding was occurring, regulators announced that New York-based Signature Bank had failed and was being seized on Sunday. At more than $110 billion in assets, Signature Bank is the third-largest bank failure in U.S. history.

    The Treasury Department, Federal Reserve and FDIC said Sunday that all Silicon Valley Bank clients will be protected and have access to their funds and announced steps designed to protect the bank’s customers and prevent more bank runs.

    “This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth,” the agencies said in a joint statement.

    Regulators had to rush to close Silicon Valley Bank, a financial institution with more than $200 billion in assets, on Friday when it experienced a traditional run on the bank where depositors rushed to withdraw their funds all at once. It is the second-largest bank failure in U.S. history, behind only the 2008 failure of Washington Mutual.

    • 03/12/2023

      The Fed just Effed the hell up. You see by guaranteeing deposits, why would anyone in their right mind want to invest in small or regional banks? Why buy bonds or equities if you’re not going to be made whole or partially so when TSHTF? After the party ends tomorrow, everyone will realize this and understand that US Treasuries are just like commodities now. The world has been set on fire by this.

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