The re-opening of the 10-year treasury was a rousing success. In fact it experienced the strongest demand since 1994! Yields approaching 4.00%, doubts about a Greek rescue, cautious, contracting consumer credit and cautious Fed comments the day before helped spark demand.
This was not surprising to me and most fixed income market participants. However, it did surprise the equity markets which have begun to believe their own propaganda. Consumers cannot spend more if they are not working. The cannot and will not borrow if they are not working. The equity markets should remain strong in spite of today's correction as rates will remain low and productivity will remain high. Ladder, barbell and shun TIPS except as a hedge.
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