Despite escape-velocity meme, yield curve continues to tighten Message of belly/long end of curve to short-end: be careful what you ask for Financials diverge from 10-2 spread, perhaps setting up as shorting opportunity next month One of the contrarian themes … Continued
10-year notes yielding lower vs when Nov’s blockbuster jobs report came out Large speculators’ net shorts in 10-year-note futures at four-plus-year high Bond vigilantes not buying hopes and prayers of escape-velocity backers Treasury bonds continue to catch a bid. A … Continued
Inability of offensives to take the lead has been a thorn in the side of rally since Oct 15th low Outperformance last week of XLY vs. XLP and HYG vs. LQD sign of trend change? Duel on between seasonally favorable … Continued
Post-November jobs report this morning, we are seeing some weird reaction in the bond market. Two-year yields have gone up more vs. the 10-year. As a result, the curve is flatter. In fact, as shown in the chart, the curve … Continued
2014 on track for 3rd successive year of $300bn-plus high-yield issuance; energy 15% of junk market By not cutting 30mn bpd production target, OPEC ready to lock horns with shale oil As both sides play game of ‘who will blink … Continued
My essay was featured in this week’s Evergreen Virtual Advisor of Evergreen Gavekal (@EvergreenGK). The theme is the amount of divergences and disconnects out there and what it could mean for the markets. EVA+11.28.2014
As of October, U.S. corporate bond issuance is on track for another record year — $1.45tn, divided between $1.12tn investment grade and $333.4bn high yield. 2014 will be the fifth consecutive year of $1tn-plus total issuance. It will more than … Continued
Economy was probably not reason why QE2/3 got launched, stock sell-off was One month after QE1/2 ended, stocks began to act sick, prompting Fed into action Year-end rally may or may not happen; impending sell-off to test Fed’s pain threshold … Continued
Solid improvement in U.S. home prices comes with cost Peak bubble home ownership at 69-percent-plus anomaly not average Price weakness in recent months plus mortgage-rate tailwind unable to seriously ignite sales Leading up to the epic housing bubble in the … Continued
2007/2008 crisis fueled by excessive use of leverage Not much learned from that experience as U.S. debt continues to balloon Consistently falling trading volume can create problem even as primary market has gotten bigger As the chart below shows, we … Continued