Murmurs From the 10-Year Note

Sat, Aug 18, 2012 - 12:43pm

What happened? Just a few weeks ago, we were worried that the treasury market was becoming a "black hole" that would soon suck in all financial assets. Instead, rates have reversed significantly. What does this mean and what does it portend?

First of all, here's where we were back in late July. The 10-year note had just fallen through 1.40% and it had everyone's attention: Here we are, 3-4 weeks later, and were at 1.82%. That is a HUGE move! What the heck happened? I think I have an answer but, first, some background.

Take a look at these two charts. One a is daily 10-year and one is a weekly. Note that the current price of the 10-year is 132.50. This is important because the area around 132 appears to be very important support. You can plainly see horizontal support on the daily chart but, looking at the weekly chart, 132 is also near the trendline from the lows of late spring 2011. Breaking that support and that trend would set a top and would foreshadow a move to 127-128. Now, look at the weekly chart. Notice that 10-year prices have been in a very long term up channel. Then notice that the past three Fed "programs" have been initiated when prices were near the top of the channel.

So, what is going on? Why the sudden dropoff in price? I think I have the answer. I posted this presentation yesterday. You may have already watched it. Watch it again and stop it right at the end, near the 57 second mark.

Fed vs. Private Sector Treasury Holdings

OK, just a couple more things and then I'm taking the rest of the weekend off. First, yesterday's CoT was very interesting, particularly in silver. Before jumping to conclusions, I'm going to wait to see what Uncle Ted thinks of the disaggregated report. In the meantime, here's a C&P of my comments from yesterday afternoon:

Submitted by Turd Ferguson on August 17, 2012 - 2:59pm.
I had expected gold to be a non-event and it was. For the reporting week, price fell $10 and OI only fell by 67 contracts. The only item of minor note was the 2,478 net drop in The Gold Cartel net short position which brings their net short ratio back under 2 at 1.98:1. Again, this is historically low and very bullish.
The action and the intrigue is in silver. For the reporting week, silver fell 32c but total OI rose by 4700. Obviously, there was a lot of new buying and selling going on. The question was/is: Just whom was on each side? looks like we have a civil war starting in silver.
For the week, The Silver Cartel total long position grew by 3,202 contracts. This is likely the silver "raptors", as Uncle Ted likes to call them. However, The Silver Cartel total short position also grew by 4,752 contracts. This is likely JPM but I'll wait to see who Ted fingers in his report tomorrow.
I've never seen a Silver Cartel long position this high before. Never. Maybe it has been but I sure as heck don't remember when. For perspective, on 2/28/12 it was 33,802 and on 4/20/11 it was 34,043. Nearly identical levels before sharp beatdowns. On 12/27/11, just before a 2-month, 20% UP move, the total long position was 41,224. Now it's 47, 797!
Similarly, the total short position is unusually large. The last time it was this high was on 3/6/12, just after the peak and subsequent beatdown of late February. In the recent past, it has been as high as 89,827 on 4/6/11 and as low as 55,356 back on 12/27/11.
At first glance, we appear to have the makings of a civil war. Instead of acting collusively, the smaller banks seem to be buying and thus attacking the short position of JPM. To contain price, JPM is being forced to issue new paper independently. Again, this is how it appears. Let's wait until Uncle Ted dissects the report before jumping to any more conclusions.
Perhaps the smaller sharks smell blood in the water. Maybe they sense the opportunity to trap JPM on the short side and squeeze the daylights out of them. Could these banks be expecting an historic, hot and explosive move in the weeks ahead???

And then there's this. While researching this post, I came across this video from March 19th. I don't know who this Ilcyzsyzn guy is but, right now, he looks like Nostra-freaking-damus! Hopefully, he's made himself enough money over the past six months that he can buy himself a couple of vowels.

I hope everyone has a great weekend. Relax and prepare mentally for everything that is soon to come.


About the Author

turd [at] tfmetalsreport [dot] com ()


El Gordoag1969
Aug 18, 2012 - 6:33pm


Most relevant post of the day. I'm trying to float a few libertads across the Rio Grande tonight myself. Between the banditos and the drug lords it's getting tougher, at least until you get to the US side where it is clear sailing. Have to be careful and hope my raft doesn't turn over and lose the load.

Dagney Taggart
Aug 18, 2012 - 6:33pm

Good Afternoon all you insane, lonely, rich, violent Turdites

Miss "Convict in the public eye before any trial" at it again...

Nancy Grace: buyers of gold/silver bullion are insane, lonely, rich, violent
Aug 18, 2012 - 6:37pm

ag1969 - ATB's

I know how you feel about the ATB's, I love them too. I only have bought the ones that I've been to. I have the Hot Springs, Gettysburg and Acadia. I just buy lots of them. Maybe I need to take a road trip and get about.

Can't wait until 2015 when the Saratoga Battlefield ones come out. I'll be a huge buyer of those.

Of course it's relevant! There PM's aren't they?

Also locked in the Antelope coins. If they don't go up before they arrive, I'm bettin' they will soon enough.

Aug 18, 2012 - 6:41pm

The Fed's credit card

The Fed's credit card does have a maximum limit, but their bank keeps raising it. It would be nice to be sent one of THOSE in the mail. I'd buy up all the available silver for starters. Just add some more zeros to my limit Jamie D. Thanks.

Aug 18, 2012 - 6:42pm


Kucinich "f...the manipulation of the Federal Reserve!"
Libertarians and Progressives Unite - Original
Who owns the Federal Reserve
9 TRILLION Dollars Missing from Federal Reserve!
Aug 18, 2012 - 6:44pm


One thing I don't get is when you say the government is running out of money. Don't know if you ever had a chance to watch this five part video series. I posted it a little while back.

Bottom line is the Treasury runs the Fed. It has above the law funding that no one gets to learn about. Part five was killer.

Aug 18, 2012 - 6:46pm

Dyna mo hum

Thanks for the update! Justice, indeed.

I wonder if anyone bought any of them? Hope not.

Aug 18, 2012 - 6:47pm

@SaratogaPrepper and El Gordo

I have been to Saratoga a few times myself, that should be a good one. I only have 1 each of the ones I listed and am trying to complete the 2011 and 2012 sets. Thanks for shoving me off the fence, I am going to order an Antelope tube from Provident as soon as I am done with this post.

Gordo, LMAO. I don't know a lot about Libertads, I have only purchased two of them in all my stacking days, and I gave 1 each to my kids. My kids are 4 and 5 and each have a pretty impressive stack for their age, including African Elephants, Dragons, Taku's, Libertads, Canadian Wildlife, Kooks, ASE's, Maples and a good amount of junk. I hope they appreciate it some day!

I see a lot of posts asking what to buy. Since I have no idea what is best to own, I buy a little of everything. Variety is the spice of life! Cheers!

Aug 18, 2012 - 6:51pm


At least 5 times in the last 5 years I have opened a JPM credit card account with a 0% introductory rate for varying time periods. All five times I maxed out the card the day I received it with silver and paid it off in full on the final day of the teaser period and closed the account. Just my little way of sticking it to the man!

Dagney Taggart
Aug 18, 2012 - 6:51pm


The bid was 116 or so for the 4-coin lot when it was mentioned here. I have no account otherwise I would have "politely" asked if he was aware that there is a counterfeit coin in the lot.

Here's a good consolidated listing of current ebay prices for various silver products:

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