The story of last week which I should have written about was the very bearish weekly close on the 30 year U.S. Treasury Bond.  Long bond prices have been supported by the Fed for so long that even dramatic downside moves became white noise to me.  So, looking at bond future prices on Friday did nothing to make me think anything significant had happened until I looked at a weekly chart this morning wherein I saw a very bearish weekly closing number.  This was the highest weekly close in yield on the 30 year bond since late April of last year.  Today’s price action saw that weakness followed through and yields close the day at 3.15%

This rise in yields is what is causing some of the weakness in Gold, as dumb traders still believe gold and the long bond yields are at odds with each other.  But it is also indicative of a widening spread between bonds and TIPS that has to be taken into account.  The monetary statistics are all pointing directly towards more monetary inflation and while in the past four years this has done little to push rates up or set the CPI on fire, it has been happening during a massive drawn down in the size of the shadow banking system — credit deflation on a mass scale.

As I write this the long bond is being bid higher, defended by the usual suspects.  But, since November the chart for 30 year US bond futures clearly shows a pattern of lower lows and lower highs.  Rates are rising while the Fed is buying like mad to stop it.  If the selling is Treasuries is beginning to take on default-risk characteristics as opposed to economic expansion ones then this is the beginning of the next inflection point in the global monetary system’s metamorphosis.