Loading ...Some thoughts on this from Dave from Denver this morning…
Just hit a 1yr low. This compression in Treasury rates reminds me of the same type of compression that occurred between the Bear collapse and Lehman collapse.
This is NOT flight to safety because cash runs to short term Treasuries for that. This is a signal of a big problem in our financial system beneath the surface.
I have no doubt that one of the big banks would have likely collapsed by now if it weren’t for the $2.5 trillion in cash cushion (excess bank reserves held at the Fed) the Fed injected into the big banks via QE plus the FAS 157 rule that lets banks mark assets to fictitious levels.
Something really ugly is melting down behind the scenes. Probably housing market debt.