DislikedCan somebody tell me what higher treasury yield does for the USD?
You can see that the benchmark yield on the 10-year Treasury Note has exploded out of a multi-month range.
It hit 1.97% earlier this morning, the highest since last May, after breaking a downtrend that goes all the way back to February of 2011!
http://finance.moneyandmarkets.com/m...2622/chart.gifIgnored
As I trade always using money flow as my edge there is no mystery here for myself.
When we have RISK OFF whatever the reason,then the money mostly ends up by first flowing into US Dollars. In the past RISK OFF also meant a flow into the Yen. Now things are changing there as it appears Abie wants a weak Yen to help the Exporters in Japan.
Abie is not related to Bennie of the FED.
If we remember the last time that the debt ceiling was HIT in the USA the credit worthiness was changed from AAA to AA.
What happened ? The US Dollar got stronger.
When Euro's and other riskier currencies sold off the money went into US Dollars which are used to buy 2 Year, 5 Year, 10 Year and 30 Year US Bonds to earn some YIELD with safety. The US Bonds BUBBLE UP UP and AWAY and the Yields go down and the FED loves it since it harms the Savers and pushes them to take risks. Since People think the DOW safe because it is moving up and BENNY of the Inkjets Print up Dollars by Selling US Bonds as well and the Banks buy them and then park the money since they will not lend out since they are imsolvent because of the change in the FASB rules.
When we have RISK OFF the Process goes in REVERSE and the US Bonds SELL OFF and the Yields go UP and that is BAD for the Economy and the US Dollars gotten from the US Bond sales go into riskier assets such as the British Pound and the Canadian Dollar and Gold.
There are other issues always at play. In the last Year the ECB has been printing money as well which they did not do in the past.
Does anyone REMEMBER last March when the ECB lent the Banks ONE TRILLION DOLLARS at 1% for Three Years.
What did the Banks do at times ? They parked the MONEY with the ECB and got paid .25% so they lost money however they would not lose their capital. When things stabilized with the games played led by Draghi then they lent out some money again.
We are witnessing FINANCIAL REPRESSION and we do not have FREE MARKETS anymore. Bill Gross as credible as they comes clearly states with many others now of similar reputation that we have a PONZI market.
On the US Dollar it says "IN GOD WE TRUST"
The TRUTH is it should say for the moment "IN BENNY WE TRUST"
When the World (China, Russia and the Middle East) starts selling the US Dollar BIG Time along with the US Bond Bubble bursting then GOLD will go up and US Bond Yields will go up just as it did in Greece and Spain. Watch France this year and DO NOT FORGET the INCREDIBLE Trillions of TOXIC PAPER on the Balance Sheet of the FED....
I welcome any and all comments whether you agree or see it in a different way.
Please Enjoy your Weekend and Smell the Roses and Pray for our leaders return.
P.S.
And Here Is Why !!!
http://www.classwarfareexists.com/10...ealth-in-2012/