Student Body Left

The Ultra Bond contract fell 10 points peak to trough in 3 sessions. No one was, allegedly, caught out. The key take away is the completely binary nature of the market. The overwhelming amount of trading absorbed by HFT micro-distortions and day trading results in little if any value interaction in capital markets. In contrast, significant settlement gaps are common due to the global nature of modern economic problems.Thus, significant pieces of the market are unavailable to a large portion of the volume community.

I believe the equity market is already, violently, establishing the long term range trade that will be with us for years. Fixed income is ahead of the action (as usual) but the low yields of September would need to be tested before "range trading" takes over. A reduction in the binary, "student body left- student body right" nature of capital markets would be a significant positive input to forward economic growth.

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