UST rates continue to drift lower, 10yr rate down 1 bps to 2.20%; speculators are long the US 10yr futures and with rates close to their year-to-date low, the market is backing that Fed will back down from its policy guidance on rate hikes

But, but, but we've been told throughout 2017 that rates have only one way to go; up lol

With speculative net long positioning in 10-year futures not seen for a decade and rates close to their year-to-date low, the market is backing the view that the US Fed will ultimately back down from its policy guidance of a series of rate hikes through to end-2019.

Hmmmmm.....

Where it all becomes truly unmoored from reality is when everyone is doing the same thing, when there aren’t just “little versions of LTCM” out there but instead nothing but LTCM’s. You have math that shows a positive discounted present value of a complex series of transactions that gives you a credit on the balance sheet of a big bank dealer who obtains balance sheet capacity by doing the same kind of thing with some other counterparty who does the same with another and so on and so on. The monetary world becomes an impenetrable series of traded liabilities anchored to reality only by regressions, expectations for future cash flows that can accomplish what fifty years ago only a deposit account could.

“Something” changed in the middle 1990’s, a genie set free from an evolutionary bottle that was downplayed and understated contemporarily even when the dangers occasionally forced themselves upon present time. There is nothing wrong with trying to forecast the future, nor even in trying to figure out what the future may be worth today. But turning that intangible expectation into something valuable, on terms equivalent with money, is a leap too far. The costs are nearly ten years of global depression, an enormous sum already but with no end yet in sight. [my emphasis] Read more