Yesterday we got strong CPI, Housing Starts, and Philly Fed figures. So the market rallied. Today we get nothing worth talking about (I'm looking at you Consumer Confidence), but we sell off.
My instinct is that the market is ahead of itself, and that for the moment, everyone is on one side of the trade. As evidence, note that while the 10-year moved from 4.60 on 1/4 to 4.77 now, swap spreads also moved 2bps wider. That points to a buyers strike. This is where real money accounts simply accumulate cash, unwilling to buy anything feeling sure better prices will soon be available.
To me, this is a bullish short-term scenario. Eventually, buyers will have to come in, and if we get any kind of weaker economic signals coming up, buyers will rush in. Rates will then fall much faster than they have risen over the last 6 weeks or so. I've got my money where my mouth is on this one. I'm perfectly willing to bet on a low 4.60% figure in the next 3-4 weeks.
With the economic #'s being mixed the last few weeks , do you think that there's some overseas selling of Treasurys to account for this recent sell-off ?
ReplyDeleteI absolutely do, but I think it won't last. See my next post. Thanks for the comment.
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