by Jim Willie, CB. Editor,

Hat Trick Letter |

June 2, 2009

The rising long-term USTreasury Bond yield has captured attention. The breakout chart for the 10-year Treasury was pointed out here when it rose over 3.1%, hardly a high level. In the first week of May, a target of 3.5% was cited, one easily surpassed. It zoomed to 3.75%, enough to create some waves in the stock market distracted and preoccupied by nonsensical Green Shoots talk on the psychological side and by falsified bank balance sheets on the accounting side. Bigtime stress has come to the USTreasury complex, a story difficult to mask and conceal, since it is at the epicenter of the credit markets. Only on Wall Street can we hear lunacy of less bad economic statistics (framed in sophisticated second derivative arguments) amidst an absolute cavalcade of miserable news on the jobs front, home foreclosure front, and home price front. So the unemployed workers, dispossessed homeowners, and insolvent households will lead the nation on a recovery, while credit approval is much more strictly applied even to the creditworthy among us? Doubtful! Only on Wall Street can we hear of the banks undergoing a healing process when huge credit asset writedowns are replaced instead by convenient ‘Credit Value Adjustments’ as booked profits on their books.

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