That is the concern for any random easy target nation without a nuclear deterrent and within drone range.
These lads would use the blood of thousands to grease their wheels. It’s grotesque
Can you copy and paste please?
Their already at that.
I have a lovely maiden heifer who made more progress in 3 minutes
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Are you planning on emailing them or would a quick call be a better approach?
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We heading for nap territory and sure then there’s no point doing anything of a Friday evening. I’ll drop them an email Monday if the Chinese haven’t invaded by then
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A Treasury market meltdown postmortem
Whatever Stephen Miller or Bill Ackman might say, it was the bond market that beat the Trump administration into an abrupt “PAUSE” for tariff negotiations.
The S&P 500 had nearly fallen into a bear market, but just two days of Treasuries puking was enough to force a rethink. The NYT has a good inside account of how much it swayed him. As Trump himself admitted:
I was watching the bond market. The bond market is very tricky, I was watching it. But if you look at it now it’s beautiful. The bond market right now is beautiful . . . I saw last night where people were getting a little queasy.
The bond market is hardly “beautiful” again. It’s notable that while stonks did stonksy thingsafter president Trump backed down, the bond market has been much more circumspect. The 10-year Treasury yield actually rose again yesterday, and while it’s dipped a little today it is still at 4.32 per cent at pixel time, and well above the 3.86 per cent low touched less than a week ago.
But just how queasy did it get? Happily, JPMorgan’s rates analysts have published a report that looks across the Treasury market ecosystem, and the overall takeaway is that the Treasury market felt pretty sick, but not nearly as badly as it did in March 2020.
First of all, it definitely was an unusually turbulent week for Treasuries, and yields became completely unanchored from what the fundamentals would suggest.
Treasuries markedly underperformed other high-grade sovereign bond markets (oh, UK) and the depth of the market — as measured by the sum of the three best bids and offers across the Treasury curve — atrophied sharply.
However, as you can see from right-hand chart there, the Treasury market’s depth didn’t evaporate as dramatically as it did in March 2020, nor reach a similar low.
Yesterday the duration-weighted market depth across the Treasury curve reached a low of $67mn. That’s worst since the collapse of Silicon Valley Bank in early 2023 — and not great in a market that is supposed to be the most liquid in the world — but it is still better than the $38mn nadir of March 2020.
Moreover, JPMorgan’s analysts note that other measures of dislocations and distress were far less extreme. For example, while stale “off-the-run” Treasuries became less liquid and gapped out, it was nothing like what we saw in March 2020, and there didn’t seem to be any run to the liquidity of fresher “on-the-run” Treasuries.
What about the by-now infamous Treasury basis trade that Alphaville and others initially blamed for much of the turbulence?
JPMorgan says this is understandable — given the size and leverage involved — but it turns out that there aren’t that any signs of severe dislocations in various Treasury futures and their “cheapest-to-deliver” bonds, which is what you’d expect to see if there had been a disorderly unwind of basis trades:
While these are reasonable fears in deleveraging episodes, a close examination of Treasury futures bases show little signs of stress, and suggest that this is one corner of the broader market that is weathering the crisis very well so far.
Here’s a rundown of the gross and net basis across various Treasury futures, open interest in the contracts, implied repo rates and so on (zoomable version of the chart):
In other words, there probably were some Treasury basis trades being unwound, and simply given the size of the strategy this could have contributed quite a bit to the sell-off. Alphaville also gathers that things were starting to “crack” on Wednesday, so this could easily have become a bigger factor had Trump not bent the knee. But on the whole it was a fairly orderly basis trade retrenchment, and nothing like the chaotic unravelling that we saw in March 2020.
Similarly, JPMorgan says that wholesale funding markets — like commercial paper and repo — were volatile but remained orderly.
On the other hand, things were definitely not orderly in swaps. Or as JPMorgan puts it in understated sellsidese: “Moves in swap spreads have been nothing short of dramatic this week.”
On the face if it, this strongly implies that the swaps spread trade really was the biggest culprit in this latest bout of Treasury market turbulence.
Alphaville hasn’t been able to get even a rough estimate for how much money was betting on swap spreads normalising. The basis trade could still be the bigger contributor to the turmoil in Treasuries even though it was relatively less whiplashed, simply because of its size. But for now we can perhaps consider April 2025 primarily a Swapsmageddon [ed: Aswapscalpyse, surely?] rather than a Basisclysm.
Anyway, all these trades are really part of the same elephant: interest rates arbitrage that rely on wholesale funding for massive amounts of leverage. And in an ideal world the US Treasury market wouldn’t be this susceptible to breakage.
Further reading:
— The trades threatening the Treasury market (FTAV)
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Is there a result where trump makes an absolute cunt of himself and completely loses face and Ireland comes out relatively unscathed? I hate the fat bastard so much id nearly take a worldwide recession if it meant he looked bad… Nearly.
Ta
This has surely been written by a lawnster rubby fan.
It’s like something Ross O Caroll Kelly would come up with.
I dont know.
My sister works for a US company. She was instructed by HR to employ a gay guy who they interviewed for a job under her. She said no as he wasn’t the best candidate and it would be her job to manage him out of the business when it didn’t work out. She stuck to her guns but most when faced with a DEI scenario in the company didnt.
Last week the company culled a huge number of staff. A high number of them were WFH doing nothing and those most vocal and disruptive about ‘promoting’ DEI.
An example;
During a marketing presentation the lad doing it said; “so guys, what we are going to look at…”. At the end of the presentation these DEI lot approached management and said they didnt want to work with the marketing firm anymore cos the fella said “so guys”… …because of that they replaced the marketing firm, with huge sunk costs! Madness…
The best person should get the job or board position full stop. Gender, sexuality whatever shouldn’t come into it.
Imagine a football team having to pick a lad in wheelchair to play cos of DEI…
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I was chatting to a mate today. Works in big pharma construction. One of the companies that trump is trumpeting as ‘bringing investment back’. They just announced 1 billion investment in the us… they also invested 1 billion in ireland that they are not publicising… literally no public notification. They know…
Lots of unknowns. I understand BMS have put the breaks on a €500m investment here and redirected it to the US.
Its a load of bollox. How we can handle anymore investment is mind blowing. Anyone I know looking for staff cant get them and they can recruit and they can be tempted to come to Dublin they cant get anywhere to live.
Eli lily plant in Limerick apparently is costing 2bn and will pay for itself in less than 5 years…if it’s 6 or 7 years prob not the end of world with the tarrifs
Unless it can pay for itself in fewer years somewhere else. If it can completely recoup it’s investment in 5 years, it is overcharging someone somewhere.
Sure there is absolutely zero doubt about that it’s fleecing someone somewhere
Big pharma are the most ruthless amoral bunch of gangsters going. The kinehans would struggle to hold a candle to some of the stuff they get away with. I genuinely wonder how some sleep at night. Sociopaths.
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The value in pharma, as far as I understand it, is getting as much of your drug produced as quickly as possible while still in patent.
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Depends what they are making. It is all about being first to market with a drug whether it is still on patent or generic you get market exclusivity for a set number of years. Some drugs on patent could easily generate 20 billion + in revenue in a given year
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I read today that the us quietly removed all tariffs on electronics overnight Friday. Back to a fully 0 tariff on the iPhone.
It benefits china, Taiwan and Malaysia.
What a mess. Very much doubt that any strategizing or gameplay was done before the whole debacle was put in motion.
You would do more planning if you were buying a house yourself.
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