Will The Bond Market Rout Spoil The Equity Orgy...Beware The Soylent Green.
Suffice it to say that fixed income markets were not invited to the orgy-fest seen in equities the past 3 months. And lately, the market for Treasuries has been showing its disdain. Yields spiking, prices falling--almost exclusively on the longer end. Yesterday there was a shift in the selling to the shorter duration paper as investors began to consider the chaos that $5 trillion in new supply will bring to the market.
The spike in mortgage rates has been substantially violent and has slowed re-financings to a trickle. Not what the Fed-Treas cabal is looking for. Quantitative easing has failed. Will B-52 double-down and committ a few more trillion to a losing construct? Let's hope he's not that stupid. He's playing a game he can't win. Not when the bond market knows there could be upwards of $5 trillion in expected borrowing from team Obama in the next 20 months. That's alotta salami to be selling.
(Quick timeout: let's not forget it took us 213 years to accumulate a national debt of $1 trillion--from 1776 through 1989. So $5 trillion really, really is alotta salami.)
The green shoots are Soylent Green.
Don't buy the hype, lest you may later choke. Pretty decent discussion after the jump.
Problems in the Land of Soylent Green Shoots
Will 007 Spoil The Equity Orgy...?