S&P vs UST Yields
Yields are going crazy right now. Everything seems like a disaster. Oddly enough, when these particular yields invert (gray boxes), the 10/2, it is historically not the best time to go short, but rather you would have benefited if you had shorted AFTER yields uninverted above 1.0(red dots). Now, okay, maybe this time is different, a ratio of 0.87 isn't exactly sane at this point and maybe the whole thing comes crashing down. It's also true that about a third of this chart represented a fundamentally bullish and arguably much more healthy market, and this is true, we could have samples that don't exactly reflect current conditions. What I'm not so certain about is the idea that the market being bearish or bullish is somehow a barometer of what's going to happen next. At the end of the day, monetary policy rules market prices and perhaps this can be taken as sign that perhaps we don't *really* know what's going on behind the scenes, which strings are being pulled, and how hard. The market is not the economy. The FED has a trading desk at the NY Stock Exchange. Let us ask this question: if it is not absolutely necessary in their eyes to have such a trading desk, why would it exist? Could it be the case that it's simply there and yet they aren't using it? I think that is the less probable scenario.
Take it as you will. Considering the sharp cataclysm of yield inversion, I'm not sure this could constitute trading advice, but I thought it was interesting, as it could be considered bullish evidence for a "last rally" into a mammoth sized selloff.
What do you think? Still bearish? Bullish all the way? Even more confused now!? Have I gone completely crazy?? Let me know!
Thanks for taking a look, take care, and don't forget to hedge your bets.
Take it as you will. Considering the sharp cataclysm of yield inversion, I'm not sure this could constitute trading advice, but I thought it was interesting, as it could be considered bullish evidence for a "last rally" into a mammoth sized selloff.
What do you think? Still bearish? Bullish all the way? Even more confused now!? Have I gone completely crazy?? Let me know!
Thanks for taking a look, take care, and don't forget to hedge your bets.
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