The US 10yr is +10bps to 4.18% and the 30yr mortgage is once again at 7%. News of famous hedge fund managers shorting bonds at the same time gold and silver are busting loose to the upside, accompanied by Fed statements regarding moderate data dependent rate cuts, has investors on edge. You can feel the air leak out from the market at the bond market gets lit up.
The way this ought to work is, markets are supposed to accept the fact that the Fed wants to avoid a Lehman style collapse by averting a major debt collapse by 2028, preparing in advance for that and lowering rates to 3.5% to get ahead of the curve. The curve I speak of is the $7.2T debt wall coming due by 2028.
So why are rates soaring? Is this real?
In the short term, nothing about the market is real. This is all emotions and men positioning into asset classes to ruin others or those on the other side getting ruined. We have all of the makings of a bull market, yet the bond market and its infinite wisdom keep getting in the way of progress.
I see no reason to believe this tape is unique in any shape or manner and the Stocklabs mean reversion and intelligence algorithms should be in a position to produce false positives. While it’s true, the efficient market theory says the all knowing market cannot possibly be wrong. I am also keenly aware of innumerable times when it was wrong, and by a lot.
Today is a poor breadth day, with many stocks in the dumps. This coming after we had some micro cap stocks surge last week and today has me thinking this is a garden varietal risk off trade, which will resolve itself once the sellers have exhausted themselves.
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