The ugliest chart you'll ever see

No time for chit-chat (or writing), but this is all you need to know about markets. The pain and ugliness is real. 5y5y inflation breakevens don't widen 40 bps in a week during normal conditions; per Monday's post, this a definitively bearish development for risky assets. Be warned.

update: It was ugly for a reason. The 10y TIPS screens were frozen. Reality is much less hideous, though still not pleasant.





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Anonymous
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June 8, 2007 at 5:03 PM ×

bonds for sale. all bonds for sale.

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Caravaggio
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June 8, 2007 at 6:55 PM ×

Wow, that is some development. Arguably, they were too low before, and nominal yields had been rising...it's like the mkt suddenly woke up, or had been slapped on the face with a great big kipper!

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Oliver
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June 11, 2007 at 12:04 AM ×

what is your .5y5yinfl index formula?

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Macro Man
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June 11, 2007 at 1:49 PM ×

Oliver, it's a Bloomberg CIX that bootstraps the forward rate from the 10y and 5y breakevens. The problem on Friday was that the price of the 10year TIPS bond (the very one that I am long) wasn't updating, so it looked like all of the 15 bp intraday rise in 10 y yields was inflation- hence the apparent blowout in the 5y5y forward.

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