Monday, May 1, 2017

Deflation Bets Crash "Down" To 2008 Levels

ZH: Citigroup Issues Warning On Macro Data Collapse
"This is the biggest crash in US Macro data in 6 years..."

"After a weak Q1, downside misses in economic data this week have a heightened capability to trigger a reassessment of the whole growth trajectory."

It's very clear that the U.S. long bond market is both terrified and bearish on Fed Policy by Police Squad.

Post-election, Treasury bond shorts reached record levels and have subsequently crashed back down to net long levels in the past week. The lowest level since 2008.

"Change of plans"
Scorned gamblers flipped from record short Treasuries to decade-long in 8 weeks. In other words, Trump's non-stop bullshit has now inflicted maximum pain on both Treasury longs and Treasury shorts, as positioning has round-tripped back BELOW election levels, along with Citigroup's macro surprise index referenced above. One difference, is that rates/yields are still far higher than they were back in October...

Today saw Treasury bond bulls ease back a bit ahead of Police Squad, otherwise today's data would have imploded yields through the floor, taking the dollar, USDJPY and risk with them.

Wednesday we will find out what further deflationary rate hikes the Fed plans to inflict on the tanking economy, because ironically, the more they drive short-term rates up, the lower they push long-term yields.

They are the architects of deflationary self-destruction, now featuring Fed rate hike expectations at cycle highs: