Jun

4

At the through of the market dip in March , the Dax Index was more or less at 6,400 while the Bund reached 118 and some, flirting around the 4 % yield for some time. With the recovery of stock markets around the world , the Bund and the treasury markets retreated to lower prices as investors returned to invest in riskier assets. After the last three days of credit crunch fears and rumors of yet other American financial institutions in trouble, the inverted correlation in price movements of bonds and stocks seems to be fading. We must of course take into account the fact that inflationary expectations are greater now than in March; yet the fact that investors don't seem, for the moment, prone to rush for safety is rather bullish for stocks. (At least until the next financial catastrophe).

Vic adds:

Quantitatively speaking what you report is confirmed, on a weekly level.


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