Another Day

Pump pump pump. The HFT boyz continue to manipulate the stock market higher despite dismal economic news domestically and financial turmoil in Europe, Japan and China. Illegal as heck, but the SEC looks the other way. Jobless claims and Chicago PMI missed big-time, but it doesn’t matter until it matters.

The good news is that the Treasury market is doing reasonably well, considering. Much less afflicted by the hackers, the bond market is reacting pretty much as one would expect to the economics news – going higher as the prospect of deflation is more and more likely. Not unhappy about that, but there’s a long way to go. Checked Japanese rates a couple of days ago, the 10-year JGB was at 0.563% even with Abe-san’s posturing about 2% inflation. US is headed there, IMO, but we’re still up at 1.85%. There are no 30-year JGBs for comparison, but the long-term average 30-10 yield spread in the US is 0.28%, which would put a 30-year at 0.84% all else being equal. Accordingly, I don’t think a 30-year yield of 1% is by any means off the table although it may take a while. But that’s OK, you get paid for waiting.

Oh, and today was the KC Fed. Zero hedge’s chart of the day:

Both comments and trackbacks are currently closed.
%d bloggers like this: