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I cannot emphasize enough how dysfunctional the bond market has become. It is at least as bad as 2008 and probably worse.

The dealers are barely making bids. This includes US Treasuries and European sovereign bond markets are collapsing … see next.

(1/4)
This chart is the Net Asset Value (NAV) of the Vanguard Total Bond Fund (BND). It is the difference between the price of the ETF and the value of the bonds it holds. The ETF is trading fully 6% below the value of the bonds!

(2/4)
This is no random ETF. BND has $50B in assets and is the largest bond ETF or near the top.

The NAV discount today is bigger than the worst day in 2008 (Oct 10). The bond market was so bad back then that TARP was announced the next day.

(3/4)
EVERYTHING IS FOR SALE.

The only place you can find bond market liquidity is telling you they think fair value is a lot lower. Someone is comfortable with selling this fund 6% below its fair value ... probably because they think this is "true" fair value."

(4/4)
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Jim Bianco
@biancoresearch
A quick take the Fed announcement tonight ...

federalreserve.gov/newsevents/pre…

Excerpt

The MMLF will assist money market funds in meeting demands for redemptions by households and other investors, enhancing overall market functioning and credit provision to the broader economy.

(1/5)
The Fed is anticipating the economy will slow down and many will stop getting a paycheck. or revenue for businesses. So they see huge outflows hitting money market funds soon (already?).

(2/5)
Mkts are already dysfunctional, especially ST paper like repo, CDs, and CP. The Fed does not want these money market funds forced to "dump" this paper to meet these outflows by selling them to dealers that already have a "full" balance sheet and cannot take on any more.

(3/5)
Read 5 tweets
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Jim Bianco
@biancoresearch
Initial claims out at 8:30AM ET Thursday. Expect a massive jump higher.

These are state-run programs. The Bureau of Labor Statistics merely aggregates the 50 state numbers, seasonally adjusts its, and publishes them.

States are free to report separately, and they do.

(1/5)
Connecticut has already said they jumped from 2,000 the week before to 25,000 this week.

(2/5)

ctmirror.org/2020/03/17/une…
Texas says they jumped from 4,500 to 16,000

(3/5)

houstonchronicle.com/business/artic…
Read 5 tweets
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Jim Bianco
@biancoresearch
30-Year Treasuries are getting destroyed the last few hours.

EVERYTHING IS FOR SALE. Stocks, credit, gold, commodities, currencies and most sovereign bonds.

(1/3)
Treasuries have been "holding together" because the guy with a huge printing press, the Fed, has been buying. But even this has not been enough and the trap door opened this afternoon. Bond futures down more than 8 points.

(2/3)
The event of this generation is upon us and all markets are re-pricing for a slow growth, more inflation, and less risk taking. Not even the Fed can stop this.

Probably a new record for the worst total return day in history.

(3/3)
Read 3 tweets

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