Did They Just Shut Down The Government AGAIN? Continuing Resolution Vote Fails

Luckily the US has everything else in order, which is why it can afford to shut down the government... Again

• HOUSE REJECTS BILL CONTAINING DISASTER RELIEF AID
• REPUBLICAN DEFECTIONS LEAD TO DEFEAT OF BUDGET BILL
• SPENDING BILL NEEDED TO FUND GOVERNMENT PAST SEPT. 30
• REPUBLICANS OBJECTED TO OVERALL COST OF SPENDING BILL

30 Year Drops To 2.99%, Lowest Since January 2009

Hey Ben, when we said we can't wait for an inverted 2s30s, we were only kidding. Please don't destroy the country to satsify our wish. In other news, 3 month Libor will soon be trading wide of the 30 year.

Market Snapshot: What's Left?

What was already a relatively volatile morning as we lead up to the European close, paused for an hour or two until the FOMC statement was released. Immediately, stocks ripped and dipped, the TSY curve started to flatten - pivoting around the 7-10Y, the USD took off, commodities and PMs dropped, and credit cracked wider. Somewhat interestingly, while all this chaos was occurring, ES remained relatively well behaved with regard a broad basket of risk assets - which while not a positive per se, did indicate that this was a very broad de-risking and not simply an overly excitable US equity market prone to vicious dips, rallies, and retracements. It seems very obvious now, and fit with our indications of an exuberant equity market relative to the 2s10s30s fly, credit, and risk in general, that the rally in equities (which baffled anyone with common sense given the background of worsening macro data) was on pure hope and perhaps the sell-off's harshness today will have burned a few fingers as it seems the Bernanke Put strike just moved a lot further out-of-the-money.

Markets Digest FOMC Statement - develop a case of Nausea

Trader Dan at Trader Dan's Market Views - 1 hour ago

The long anticipated prognostication finally arrived today as the markets, with bated breath, eagerly poured over the entrails of the FOMC press release to scour for clues to the future. The oracles of Delphi, descended from their lofty tower, uttered their prophecy, and then returned to their temples to observe their handiwork. Meanwhile, the stock markets having digested the contents, soon began to experience an uncomfortable sensation which worsened as the meal settled. Down collapsed the equity markets and then down went the commodity markets and up went the Dollar. The Fed anno... more » 

 

 

 

 

Is going to take more then this America...

silvergoldsilver at silvergoldsilver - 3 hours ago

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Harry Koza - ALL of Europe is insolvent, Citi should be belly up

silvergoldsilver at silvergoldsilver - 4 hours ago

"The economy is like a kindergarten class on Ritalin." Enjoy. Click here for video ... 

 

 

 

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Federal Reserve launches Operation Twist

Eric De Groot at Eric De Groot - 4 hours ago

QE(n) has yet another injection with a catchy name - Operation Twist. Perhaps its name was derived from the condition of policy makers' underwear after reviewing the latest economic trends? Headline: Federal Reserve launches Operation Twist NEW YORK (CNNMoney) -- The Federal Reserve announced 'Operation Twist' Wednesday, a widely expected stimulus move reviving a policy from the 1960's. The... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

 

 

 

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Thankfully The Fed Farce Is Now Over...

Dave in Denver at The Golden Truth - 5 hours ago

I don't have anything to say about it other than that the circus leading up to the decision announcement is retarded. I also have to say that Steve Liesman has to be the biggest buffoon in financial reporting. His performance makes Jerry Springer and Cornel West look brilliant... At any rate we all knew what the Fed, for the most part, was going to do today. The question is, when will the real printing re-commence? My partner opined: "they don't have much choice." To which I said: "yep, either print or don't print - if they don't print the system collapses." So that's where... more » 

 

 

 

 

 

Twist Spin Begins As Morgan Stanley Tries To Pass Fed Action As Bigger Than Expected

And so the Twist spin (pun and all that) begins after Morgan Stanley's Jim Caron tells clients that OpTwist will remove "more duration risk than expected." He says that the operation will remove more than $500 billion in 10 Year equivalents of duration risk from the market, which is far higher than the firm's expectations, and adds that he was "most aggressive on the street" saying the consensus was for $300 billion in 10 Yr equivalents, especially with QE2 removing $490 billion in 10 Yr equivalents. Well, Jim, the problem is that you are right about bonds - when it comes to Twist a lot of it was priced in, but judging by the 30 year reaction, not all. However, when it comes to stocks, the robots had been expecting not just Twist but a significant LSAP component, potentially up to $1 trillion. Which explains the unwind. And as for the opportunity cost of Twist, it is shown in the chart below. As SMRA just predicted, the average maturity on the Fed's balance sheet is about to soar by 33%, from 75 months to an all time record 100 months. This means the Fed goes all in on being able to control rates. Should the Fed have to print, and it will before long, at that time the Fed's interest rate risk will be unprecedented, and should it lose control, it will lose not only that, but all credibility it is capable of keeping something, anything, be it inflation, unemployment or price stability, under control. Then, it will be truly time to panic.

Epic Failure In Fed's Price Stability Mandate As Treasury Curve Shift Is Most Abnormal In 30 Years

As Diapason's Sean Corrigan demonstrates, the Fed has failed at not only every single explicit mandate, such as keepin inflation and unemployment under control, but in its most important implicit one as well, that of preserving price stability, following an 8 week 2s30s curve shift which has been the greatest such move in 30 years, and a nearly 3 sigma event. 3 SIGMA... In boring government bonds...

Disappointment With The Fed

There are lots of things out there that once they have been done, can never be undone. Ben just disappointed the market for the first time. Whether he knew it or not he failed to beat expectations. He has been so good at managing expectations and using that as a policy tool he lost sight of how far ahead of itself the market had gotten. Everyone expected twist and seriously, what's a 100 billion in size between friends in this crazy market.

Presenting The Maturity Change Of The Fed's SOMA Treasury Holdings

Wonder why the Fed's DV 01 is about to surpass $2 billion in a few short months? Because the downward sloping line below, which shows the average maturity of Fed holdings, is about to go up, up, up. And yes, that means that every 0.01% change in interest rates will mean a $2 billion capital loss for the Fed. But, oh yes, the Fed can always print money so no risk there...

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