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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