UPDATE 12:38 PM EDT -- IT'S GETTING WORSE --- Something SERIOUS is Happening in US Treasury Bond Markets

Source: Hal Turner

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First off, let me say: You should not make any financial decisions based on my reporting or my opinions.  Please consult with a Licensed financial professional before making any financial decisions.

Something very peculiar - and VERY serious - is happening in US Treasury Bond markets.  The Yields on the 2-year, the 5-year, the 20-year, and the 30-year Bonds have experienced sudden and dramatic 40bps spikes several times today.

The charts show the peculiar activity:

It began very early this morning in the 2-year Bond Market:

That is a massive, violent spike in the US Government 2-Year Yield. Looking at the chart in image, the yield rocketed from approximately 3.91% to over 4.30% in an incredibly short window before snapping back down.

Usually, a vertical line like that in image above is triggered by one of three things:

1. Shocking Economic Data: If an inflation report (CPI) or employment data came in significantly hotter than expected, the market would immediately price in higher rates for longer.

2. A Liquidity Event: A massive sell-off of bond futures that cleared out the order book because there weren't enough buyers at those levels.

3. Algorithmic Feedback Loop: Once a key technical level is broken, high-frequency trading bots can trigger a cascade of sell orders, causing the price to teleport to the next available level.

When the 2-year yield spikes like this, it sends shockwaves through stock markets, US Dollar and the borrowing costs.

Here is a small expansion of the earliest activity above:

Then, as the morning progressed, the spikes repeated over and over:

Then REAL trouble-signals started flashing in ALL the US Treasury Bond Markets; 2 year, 5-year, 20-year, and 30 year:

At first, folks thought this might be a data glitch.  But it kept happening.  Now, the general consensus is that a VERY LARGE Bond Holder is DUMPING U.S. Treasuries and doesn't care who sees it. 

More worrying is the almost immediate return to previous lower levels. 

The general consensus is that the sale of the Bonds is triggering the Yield spike (because the sale of such bonds indicates to the market they are now riskier) but almost immediately, somoene else is "buying" those bonds, thereby returning the Yield to normal.  

The general consensus is that the ONLY entity big enough to be instantly buying the Bonds would likely be the US Federal Reserve.  It is believed the Federal Reserve is doing this to keep the Yields at low interest.

But if this is actually what's taking place - we just don't know yet -- then that means someone big is DUMPING US TREAURIES and the fed is creating money out of thin air to buy them.  Monetizing debt!

Keep a close eye on this.  If one "whale" is dumping US Treasuries, that could start an avalanche of others doing the same thing.  Faith in the Dollar could suffer greatly if this spreads.

UPDATE 12:38 PM EDT --

It's getting worse . . . .

Hal Turner Remarks

The 30yr US Treasury yield is doing something very strange right now and I think I know why.

Look at these candles.

This is not normal volatility.

Something is deeply wrong with the bond market right now.

Here's my honest take on what's happening:

I think China is dumping US Treasuries. (No factual basis for this belief, just my gut feeling)

And the market doesn't have enough buyers to absorb it.

Here's why that matters:

When someone sells bonds normally, there are buyers on the other side ready to absorb the selling.

The price moves smoothly.

What you see in this chart is the opposite of smooth.

You see yields spiking and crashing violently within the same candle, over and over again.

That's what happens when a MASSIVE seller hits a market with no liquidity.

The order book is empty.

There aren't enough buyers.

So every sell order moves the price violently before someone steps in.

China holds nearly $700 billion in US Treasuries.

That's down from $1.3 trillion at its peak.

They've been quietly reducing for YEARS.

If they're now accelerating that exit, and they have every geopolitical reason to, this is exactly what it would look like on a chart.

Not a clean selloff, but a chaotic one.

The kind that breaks things.

I could be wrong about who the seller is.

But I'm not wrong that something very unusual is happening in the world's most important bond market.

And the stock market hasn't figured it out yet.

I am not a licensed financial expert.  I do not own, buy, or sell and stocks, bonds, or other financial instruments.  I have ZERO education in matters financial and have NO SPECIAL KNOWLEDGE of the financial industry.   Again, you should not make any financial decisions based on my reporting or my opinions.  Please consult with a Licensed financial professional before making any financial decisions.