By Mike Larson
Thursday, August 15, 2013 at 3:35 pm
Did you hear the news out of the Treasury Department this morning? It was an absolute disaster for the bond market — and for good reason:
Foreign holders dumped a whopping $40.8 billion in long-term Treasuries, the biggest exodus from bonds in the history of the U.S.
Worse, June was actually the third month of mass dumping in the past four, for a total of $79 billion. China, the biggest holder of our bonds, unloaded $21.5 billion, while Japan, the second-largest holder, dumped $20.3 billion.
The chart below says it all. The spikes on the right display the selling.
Today would have sold off more, but you know how opex is. (Notice how the market magically gave out after 4, as options expired).
If treasuries continue to take a beating, and you know they will (especially if you read up), this is going to get ugly. And the debt ceiling fight is coming up to boot.
This is coming out of left field for a lot of people. Most wont know what hit them.
This is what is happening. Treasuries are getting crushed, rates are rising, and gold is rallying. Gold isn't supposed to rally when rates rise. The sell off in treasuries is not a positive for US equities this time around.