I think people might be missing some of the nuance inherent in what’s happened to markets this month.
“This time is different.”
The bottom line: for credit investors, the risk of central banks becoming more hawkish is now a two-headed beast.
“As I struggle to find the words to communicate my thoughts, I worry they will be misconstrued. Yet I don’t know how else to say it – except to blurt it out. So at the risk of being labeled a fool, here it goes – it’s different this time.”
It may be time to question your religion.
“Last week’s twin 1,000 point plunges on the Dow were not errors.”
Is this it?
Welcome to Friday.
Or at least that’s what it feels like.
“I am 99.90 bid the 0.10%’s of 27.”
“OK, paying 90. For how many?”
“I don’t believe that for one second.”
“…never in modern financial history has a Central Bank expanded its balance sheet through quantitative easing and then successfully shrunk it back down.”
“The next great crisis will be caused by Central Bankers not realizing that all this monetary fuel they have pumped into the system has finally ignited, and like a bonfire that gets out of control, they have no way of extinguishing it.”
This should be interesting.
“Therefore, 2018 has the potential to be a substantial tipping point in the supply/demand dynamic.”
Here we sit, barely two weeks into the new year, and guess what? Risk assets have already blown through some analysts’ full-year projections, with both equities and HY (for instance) rallying further than some of the less sanguine (yet still optimistic) year-end 2018 targets.