Rick Santelli, the heated and impassioned CNBC reporter who actually provides some good technical info from the floor of the CME, has been talking about the importance of the closing yield on the 2-Year Treasury of 75 bps or greater and yesterday it happened.
Yesterday’s closing yield near 80 bp’s is the highest yield for the 2-year Treasury since April, 2011.
Even more explosive, yesterday, per Bespoke, was the move in the 1-Year T-Bill, closing at 47 bps, which was a 5.76 standard deviation move for the 1-year T-Bill.
The T-Bill has risen 8 bps since September 1 ’15. That is a pretty unusual move for the short end of the Treasury curve.
Here are the closing Treasury yields yesterday, and the trends in yields since September 1, ’15.
Do this yield move have “leading indicator” implications for the Fed meeting Thursday? Probably, particularly since yesterday’s economic data, was actually inline to weak. Retail sales were OK, while the Empire Manufacturing Index was pretty weak.
Client accounts have been sitting with the ProShares Short 20+ Year Treasury Rund (NYSE:TBF), an inverse Treasury ETF for a while, and recently the ProShares UltraShort 20+ Year Treasury Fund (NYSE:TBT), for a trade. Some TIPs were bought this week as a hedge and since the TIP was oversold.
I'd still be surprised if the Fed raised rates on Thursday, but they could come with aggressive language, or some other twist to the “binary” up 25 bps or flat.