Resignation Boogeyman

Now that equity markets have broke loose from the velvet ropes of global CB policies reverse engineered for low vol and promoted as "Zee Stabeeelitee" - the "Bond Market" has once again found itself the near universal boogeyman excuse for the violent sloshing around. Got that? Move along, nothing to see here...millennial buying opportunity..yada yada ....

Now, if my martini soaked brain serves me correctly, same said pundits were trotting out all kids of graphic representations 6 months ago showing how the Fed's actions and the subsequent rising of the rates was all sorts of positive for their out over their skis equity holdings. The long flattening twist to the yield curve was also hunky-dory because the general direction was North.....they said. Presently, a jolt back steeper in a vol spike causing all matter of unwinds, is all Martha Stewart "good thing."

Speaking for the Bond Market, "I turn my back on this world. I'll turn my eyes from this world, Oh well...."

As we have mentioned before - and @Conorsen has also - from Oct thru Jan STIR futures broke away from the pre-ordained, vol suppressing, "we will tell you what we're doing" openness of the FOMC. Massive pro-cyclical fiscal initiatives at full employment 8 years into an expansion improving around the globe doesn't jive with "measured." The positive effects of "twisting" come with a caveat of "for a little while", then funding costs start to nip ya. Our core belief from 2016 remains in tact - Interest Rates Rise and that's different from 35 years of the opposite. (If you want to see a good graphic look at ZEM19 Monthly !)


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