Food for thought???

http://www.zerohedge.com/article/game-theory-trading

The Treasury and Fed are now at a crossroads. The Dollar Index is back to 2007-2008 levels, as the liquidity-driven rally in equities has been met with pervasive USD selling. Crude oil is back to $70/bbl and further depreciation of the Dollar could push oil back to triple digits, especially if the Dollar Index breaks its important support around 72. $80/bbl+ oil cannot be at the forefront of any sustainable economic recovery.

On top of that, Treasuries have tanked since January's highs and sold off massively since QE was initiated back in March. 30-yr Tsy rates have more than doubled off their lows in less than nine months, and the 6% mortgage is back. 6-7%+ mortgage rates are much too expensive to allow any economic recovery, and Bernanke's quest for 4.5% mortgage rates at the beginning of QE clearly cannot be reached if current trends sustain.

The fact is, the Fed and Treasury both need a large, swift suppression of rates to reflate credit to catalyze nominal recovery and to be able to roll over the enormous national debt and keep spending.

Just like last summer, when the Dollar was depreciating so quickly and crude had reached levels of "energy crisis," we are now at an important crossroads for the USD. Back then, interest rate hikes to defend the USD were being considered. Now, clearly, that is not an option whatsoever. In fact, rates are much too high as it is and the Fed Funds rate has reached its nominal price floor of zero.

The only option for the Fed/Treasury is to somehow spur organic demand for USD and Tsys. Nothing like a crash in equities and commodities to do that.