Thursday, May 28, 2009

Bernanke's Quantitative Easing

Interest rates on the 10 year and the 30 year are seeking their natural levels. Bernanke played poker with the market, and he lost, and once again, Bernanke and his minions do not recognize what the market does already. Rates need to go higher.

3.73 for the 10 year, and 4.65 for the 30 year are approaching uncomfortable levels for the market, but wasn't the Treasury market the biggest bubble that we have ever had?

So why should rates only go to levels that are uncomfortable?

Markets always press their bets, and they go to ridiculous levels. Aren't stock prices at uncomfortable levels already for those that are short?

And didn't David rosenberg and all the other bears, who argued for lower equity prices, also argue for lower bond yields in this so called "deflationary" environment?

Now you are getting uncomfortable squared!

Thus those that are bearish, are the ones that are most alarmed with this action.

But isn't this the action you would see if the economy was getting stronger?

Now throw in some uncomfortably squared bears, puking up positions, and you get the action you see on the screen.

And the action in bonds is uncomfortable enough that Barney Frank comes on CNBC and alerts viewers that Bernanke was looking for signs of inflation.

When the oil market was spiking lat year, PIMCO had a fund that was buying up oil futures with both hands, excaberating the economic problems, and forcing bond yields down.

Now the shoe is on the other karmanic foot, and PIMCO is getting kicked.

So much for shaking hands with the Government!

That only works for the back door deals!


Anonymous said...

Rising rates are a sign of a new bull market... In foreclosures. This should light a fire under the stock market as the new homeless shift their money from mortgage payments to stocks. Rally on.

Anonymous said...

is FITB still a buy? HBAN, KEY? and RF?

how would you rank those and what are your targets for them in the next week or so?

Palmoni said...

They are all better buys now. Now they are starting to look bette ron the tape.

I think the selling in these numbers are finally over.