It was just yesterday when we warned of a “bond bloodbath” in the event central banks ever take the proverbial plunge and attempt to normalize policy. Specifically, we brought you the following graph from Goldman which shows you the extent of the damage should yields mean revert: (Chart: Goldman) As
Earlier today we discussed how the Bank of England and the ECB’s corporate bond buying programs are likely to drive demand for US investment grade credit. The rationale is pretty simple. Here’s BofAML: “We find that, by deflating sterling and euro credit spreads, the BOE and ECB corporate bond QE pr
Back in March, we got a look at just how absurd the dynamic between central banks and the market has become when the Osaka circuit breaker was tripped after the bid-to-cover in a Bank of Japan bond buying operation jumped to 3.58 from 2.93 the previous week. Basically, everyone had rushed in the pre
Let’s talk about dollars. As you might have observed, the broad dollar got quite a boost from Friday’s strong payrolls number: That’s basically just rate hike expectations. It’s a kind of “ok Janet, how are you going to justify not hiking now?” bet. Of course the irony is that that dollar strength c
If you’re a bear, the funny thing about this market is that pullbacks don’t feel like they should. That is, when stocks close red, you don’t feel vindicated. In fact, it’s the opposite. When you hear the closing bell you almost feel like maybe you should have bought the dip. It’s like we’ve reached
In light of today’s white hot jobs print, we wanted to address something that’s been bugging us for quite sometime. It’s one thing to observe an economic trend and explain, preferably using data, why you think it’s undesirable or otherwise suboptimal based on your utilitarian view of what’s best for
Now you see why we made such a big deal out of the Fed, Treasury yields, and data dependence on Thursday. Allow us to show you two headlines that hit the terminal within eight minutes of each other Friday morning: FOMC’s Dec. Mtg ‘Still Most Likely’ Time for Next Hike: BofAML ‘Let’s See Yellen Get
On Wednesday, Goldman was out with an interesting note on the extent to which Treasury yields react to economic data surprises. Right off the bat that sounds boring, right? Well it’s actually not. This wasn’t just an academic exercise for the sake of meeting some research quota. It matters a great d
Now days, it’s always advisable to curb your enthusiasm when it comes to hitting the keyboard frantically as soon as a developed market central bank announces something big. Why? Because in all likelihood you’ll end up having to publish something an hour or so later with a title like “market fades l
