U.S. Treasury securities overnight fell for a seventh straight trading session, the longest run of declines since June 2006. The 10-year Treasury yield climbed three basis points to 2.30 percent. Again, I emphasize this climb in rates is occurring while Bernanke is conducting Operation Twist, which is supposed to put downward pressure on long-term rates.
The bond market appears to be in the early stages of a very long decline, perhaps years long. Avoid bonds at all costs. Aggressive traders should consider shorting bonds across the yield curve.Everything is going to climb, short-term rates and long-term rates.These will not be minor moves. It will catch most by surprise.This morning CNBC is reporting that Fed Chairman Bernanke tolds CNBC: We're Watching Recent Rise in Interest Rates.
Bernanke is likely paving the way for an interest rate hike down the road. He must know price-inflation is creeping up on him and the climb in rates, despite his Operation Twist, is scaring the hell out of him. He's a rat in a cage, whatever he does print or not print, it is going to be a mess. If he continues to print, the price inflation is going to get out of control. If he stops printing, he crashes the manipulated boom economy.