Yield Curve Today; Risk Flies ‘ON’

One thing I like about volatility; it is predictable when it becomes a cycle.  That’s not to say this volatile up and down phase will last.  Indeed, it won’t.  It could be leading to eventual new trends, which would then be played accordingly.  But right now we are in a series of angst ridden down drafts and then desperate ‘V’ bounces, in which momo’s collectively pile drive back in.

Looking at the state of yields today, it just makes me laugh.  Remember yesterday’s graphic, showing an extreme impulse to risk ‘OFF’ with all yields down?  Switzerland was so yesterday.  Global deflation was so yesterday.  The end of the Euro was so yesterday… caught me, it is still today too.

Speaking of yesterday, yesterday’s post about a potential Bank bounce and T bond drop was well timed.  What is the public going to do with all those T bonds it sucked up if rates rise?

Anyway, here’s the not so crazy configuration today.  Totally pivoted off of the unsustainable bad emotions of… yesterday.  Rates up, curve dropping.

10, 5 & 2 year yields from Bloomberg

If the cycle keeps up, there will be plenty of tomorrows too.  The market has been manageable and quite enjoyable actually, since the end of summer (and the Ukraine hysterics), speaking personally.

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