Sugar, Sugar: Has the Fed's sweetness run out already?

Man, we thought the sugar-rush effects of QE would be temporary, but we did not believe that they would fade this quickly. Since yesterday, we have commodity prices decline and prices of U.S. Treasuries rise. In fact, oil prices fell so sharply yesterday that there were concerns that a so-called “fat-finger” erroneous trade was placed. Word is that the price decline was due to the flattening of a large long position in oil. This caused other market participants to sell oil futures and the bearish sentiment spread throughout commodities. It could be that, market participants believe that the struggling global economy could reduce the demand for crude oil and the dollar (along with gold, which is another $10.00 an ounce) will remain the global reserve and safe haven currency. We believe that the Fed will do everything it can to fight deflation (which is a real possibility of the global economy continues to slow). However, we do not see rampant inflation or sky-rocketing oil prices at the present time. The situation could change down the road, if the Fed is not vigilant. Tom Byrne tom@bond-squad.com. www.bond-squad.com www.mksense.blogspot.com 347-927-7823 Twitter: @Bond_Squad Disclaimer: The opinions expressed in this publication are those of the author. They are not, nor should they be considered solicitations to purchase or sell securities.