Hey, happy new year all Slopers, and TK, a special happy new year to you! I wish we had more honest and rational voices out there in the wilderness, which is exactly what Slope is in my limited but increasing experience. Something I wrote this morning while pondering a trigger point in treasury rates:
What is the story here? 5, 10 and 30 year treasury yields are marching
in lock step saying these bonds' would-be buyers want greater
compensation if they are going to take on the debt of a society that
literally lives by inflation, and by debt. The yields are rising as if
to say "Look, we will keep the
illusion intact as long as you are willing to manufacture more debt to
sustain it, but we must be better compensated as the moral risks get
higher here in Full Hubris '10".
The key yield to watch
is of course the 3 month t-bill, which will tell the Fed what it is
going to do (you don't really believe these clowns are in control of
such things, as they pretend to make these decisions, do you?) and if
the T-bill tells the Fed that rates are going to rise, then we will
find out how sustainable the economic recovery is.
As an aside,
you may know that I have a position in the real world where my finger
is on the pulse of the US manufacturing economy. The better than
expected mid-west manufacturing activity is not a lie. There is
recovery, and I see it elsewhere as well. I'll talk about my vantage
point on the 'real' economy a bit more in NFTRH. 'THE' recovery is not in dispute and mine is surely no perma-bear, perma-Armageddon blog.
But
it is sustainability that is the question, and rising yields, if they
are not stopped at our 'line in the sand' of secular change, will
answer a lot of questions in that regard as we move forward. The dollar
has predictably been rescued from the abyss that the MSM were
trumpeting. Now there are actually strong dollar wise guys coming out
of the woodwork. Now things get interesting.
