May

23

Bloomberg GrabA chart of bonds showing this lowest since November and yields going up is not auguring very well for housing as credit rationing and high interest rates in a declining job market are twin killers.

George Parkanyi writes:

I've lived that chart. I fortuitously put on a double-short Treasuries ETF position on the last day of 2008. The position has been bypassed by my re-allocation signals because it's been kind of a tortoise, so it has slowly evolved into a nicely profitable trade. However, in the last 2 days it jumped sharply to new highs. I believe there has been a tectonic shift in psychology that now puts currencies (particularly USD) and government issued debt on the defensive - due to the downgrade of the UK government. Telling was the sharp drop in Treasuries on the same day as a big drop in stocks. What, no flight-to-kwality?

Just the IDEA of the paper of a major western power suffering a downgrade - the notion that it can happen at all - has started something new in the currency, debt, and inflation-hedge markets. This now gets very interesting.


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