I Want to Leave it Again

- I'd like to wish it all away. And I know and I know, I don't want to stay.- Eddie Vedder


This lyric from Pearl Jam's "Yellow Ledbetter" pretty much sums up my feeling about Treasuries with the 2 year at a microscopic 38bp.   The Fed appears to be waking to the idea that what ails America is now structural not liquidity based. Holding the stock of the monetary regime steady won't work unless aggressive structural changes take place. Austerity, a term difficult to use at budgets this enormous, is not the objective.

The roll in S&P futures should provide some respite from the mudslide. Rates markets are riding RSIs over 80. Any temporary equity pop will make holders nervous. The Tan book was oddly, some might say comically, upbeat. PDs that were economy bullish and rates bearish in 2011 caved in May and have been scrambling to reverse and save face. I think they are complicating their mistake.

The power of a Japan style death spiral vortex is strong. Culturally, a nation must be accepting of the somnambulant lifestyle. Americans, we believe, are not. For now, I'm not sure if we're the boxer or the bag.



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