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The 10 year yield has taken one big jump in the last few weeks. Even the German 10 yr yield jumped like crazy. :(

German Bunds

anonymous says

what is your take on the rigging/manipulation investigation

Are you talking about the Libor scandal?

Not really in regard to channel the 10's are acting on...

Nothing out of the norm in the channel trading or volume on 10's... There was. A huge short bond 10 year trade on that everyone has the same data on...

Any tie-in to inflation?

Blurtman says

Any tie-in to inflation?

Some of the other wage inflation numbers are picking up and ECI wage inflation is back to where it was when the Fed started to hike back in 2004.

However, a lot of the bond market move is away from traditional economics and more on inter-cycle moves on technical levels

Germany Bunds have gone parabolic

Increasing risk-free yields and inflation under control is the risk averse couch potato investor's dream.

Key lines for lower yields now are close under 2.35 and the. 2.29.... Could take us back to 2.14... But higher highs snd higher lows in place for 10's

2.49% print today on 10's ... have to watch for massive move in bonds, selling can accelerate

The move in bunds have been historic recently, still no real inflation in Europe

Logan Mohtashami says

The move in bunds have been historic recently, still no real inflation in Europe

The lowest yield at one point in early April on the 10 year German bonds was 0.05%. Now it's 1%. A 20 fold jump in less than 2 months.
Most of it a result of speculation. Those yields could literally not get any lower.

Strategist says

The lowest yield at one point in early April on the 10 year German bonds was 0.05%. Now it's 1%. A 20 fold jump in less than 2 months.

Most of it a result of speculation. Those yields could literally not get any lower.

Higher yield Block party

Why not buy a basket of high yield international 10 years (if you could) and hold to maturity? Currency risk exists, but getting 8% a year sounds tantalizing.

Logan Mohtashami says

Brazil is way up there. Value for money is with USA. Putin is paying 10.5%.....he can keep his worthless bonds.

Blurtman says

Why not buy a basket of high yield international 10 years (if you could) and hold to maturity? Currency risk exists, but getting 8% a year sounds tantalizing.

You could, but they won't include US or Western Europe.

Strategist says

Brazil is way up there.

Brazil should be higher, they are a discount

Strategist says

You could, but they won't include US or Western Europe.

Sure. I don't think the Rooskies would ever default now.

Now the fun starts, come 2016, training wheels starting to come off

Logan Mohtashami says

If the economy does not get going soon, we will all be in deep shit.

I'd bite on 6% 10 year UST's as a start.

Blurtman says

I'd bite on 6% 10 year UST's as a start.

Not sure if we will get over 4.7%... a 2017 story line

Logan Mohtashami says

Blurtman says

I'd bite on 6% 10 year UST's as a start.

Not sure if we will get over 4.7%... a 2017 story line

You will only get those high rates if inflation takes a sizable jump. But then that will defeat the purpose.
If you want the best investment ever, buy homebuilder stocks or an ETF that tracks the builders. I put my life savings of a $1,000.00 in the ITB, and expect to turn it into $10 million by 2017.

Strategist says

If you want the best investment ever, buy homebuilder stocks or an ETF that tracks the builders. I put my life savings of a $1,000.00 in the ITB, and expect to turn it into $10 million by 201

Speaking of which I think I have to talk about or at least bring up a question on air to CNBC on Monday with the trading nation group next Monday 10:00 AM our time

When you adjust to inflation new homes are over the bubble just now

If you did the same for older homes it's not even close

sbh says

Blurtman says

I'd bite on 6% 10 year UST's as a start.

At 6% I'd become a permanent world traveler and never come back except to sample some BBQ brisket every couple of years.

California real estate generates 7%. :)

We wonder why have a housing inflation problem here in CA

If you guys wanted to read a good full report on California High Housing Cost.

Here is a good report

http://www.lao.ca.gov/reports/2015/finance/housing-costs/housing-costs.pdf

Logan Mohtashami says

If you guys wanted to read a good full report on California High Housing Cost.

Here is a good report

http://www.lao.ca.gov/reports/2015/finance/housing-costs/housing-costs.pdf

Loved it. Thanks for posting.
California has never built enough homes. In the last 8 years, neither has the rest of the country. Why is the rest of the country not building enough homes?

Strategist says

Why is the rest of the country not building enough homes?

Mix match to demand

The curve since the mid 1990's was for ownership when the demand curve about 30% of it fluff... so you need to fix the mix match to demand for rentals. This limits the builders to build affordable housing due to profit margin restraints

Hence why we have this now

Logan Mohtashami, a California-based loan officer, says the notion that lending standards are tight is a myth.
“There remain a number of highly respected housing ‘gurus’ who continue to profess that it is unfairly tight lending standards, not the lack of qualified buyers that are suppressing a housing recovery. The difference is not academic,” he says. “A quick review of the requirements for some of mortgage loans available may surprise you.”
VA loans require no down payment, for example, he notes. And buyers can get other mortgages with credit scores as low as 560, with 50% debt-to-income ratios, or down payments as low as 3%.
“At this point all you can do is bring back 0% down loans and stated income loans for wage earners,” said. “Look who is really pushing the tight lending thesis. People in New York, D.C., San Francisco. What I call economic bubble cities. Main Street America gets this thesis I am saying.”

"Renting The New American Dream"

http://blog.credit.com/2015/06/renting-the-new-american-dream-118437/

Logan Mohtashami says

Strategist says

Why is the rest of the country not building enough homes?

Mix match to demand

The curve since the mid 1990's was for ownership when the demand curve about 30% of it fluff... so you need to fix the mix match to demand for rentals. This limits the builders to build affordable housing due to profit margin restraints

Higher prices will fix that restrained profit margin real quick.

Strategist says

Higher prices will fix that restrained profit margin real quick.

Not only will that not fix the issue... it's creating a system supply where older homes are not only geographically more advantages to first time home buyers they're much more cheaper... hence why we are down in sales in terms of estimates made years ago...