Selloff Reflections
"Why now?", a couple of my favorite strategists asked, in the wake of a brutal selloff on Wall Street and an extension of what, by now, can fairly be characterized as an inexorable bond rally. They were talking specifically about the curve flattener, but that simple question is a good jumping-off point.
10-year US yields ended near the lows, at 1.172%, flattening the 2s10s. Futures volumes were robust. Note that as of Monday afternoon, benchmark US yields were almost 60bps from the 2021 highs.
The rotations come so fast and are so short-lived now. It’s connected to the “pulling forward” of investment/economic themes as well.
I sorta feel bad for the spec cowboys here. One needs to be agile and fast to be the first in and first out on a narrative and quickly move on to repeat the process in another narrative du jour. But with the risk of being too early & piling into a rotation that doesn’t stick.
Economic statistics only matter in so far as whether or not they buttress today’s favored trading narrative.
That’s the best comment I’ve read on this current issue…thanks..
In one of my feeds, and I’m not sure how to verify it. It was stated Finch had warned us treasuries might be downgraded due to the political situation in the US. Even if not true that rumor could have some effect.
Fitch
Don’t forget OPEC+ increasing oil supply. That is disinflationary.