Saturday, May 9, 2020

UST2Y 2-Year and UST5Y 5-Year US Treasury Yield Daily Charts; 2-Year and 5-Year Yields Print All-Time Historic Record Lows; US Poised for Negative Rates Despite Federal Reserve Chairman Powell's Misgivings

The 2-Year and 5-Year US Treasury Note Yields slip to historic lows. The 2-year yield prints 0.105% on Friday, 5/8/20, after the depressing US Monthly Jobs Report where 20.5 million people were laid off with an unemployment rate of 14.7%. Bond and note prices continue higher, as investors seek perceived safety, thereby sending yields lower. Negative rates are on the table for the United States of America. Fed funds futures are pricing in negative rates for 2021 setting up a showdown between the bond traders and Federal Reserve Chairman Powell.

The ECB has implemented negative rates for six years and the BOJ for four years and these two central banker bozo's are not exactly shining examples for the Fed to follow. Fed Chairman Powell is on record stating that he does not see anything in Europe that is convincing to go down the same negative rate path.

The market, however, now believes the Fed plans to take rates negative. The Federal Reserve needs to quickly discover and discuss the next marginal policy tool in the toolkit. Will Powell cow-tow to the bond market and take rates negative or will Powell plant a flag at the zero bound and make a stand against negative rates for America. Time will tell. The US and global financial systems are in a slow-motion implosion.

Gold is benefiting printing above 17 hundo. As the 2 and 5-year yields fell lower, which did have a lot to do with technicals within the exchanges and markets last week, gold jumped higher. Also bitcoin; the digital currency tags 10K after a 5K bottom in March only 8 weeks ago. It will be interesting to see if the 2 and 5-year Treasury charts above slip negative and if in the future Powell eats some humble pie and decides to embark on a negative rate strategy. He (Fed) would then be following in goose-step with Europe (ECB) and Japan (BOJ), the blind following the blind; three blind mice. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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