Wednesday, June 21, 2017

Bonds Will Be the Signal

The relentless rally in the long end of the bond market continues.  The Treasury yield curve is aggressively flattening ever since the market interpreted Yellen as being hawkish.  Let's not pretend like the Fed actually watches the real economy.  If they did, they would be doing nothing.  They would have done nothing for the last 3 years because nothing has really changed.  No, they look at the stock market and the stock market is telling them to tighten.

I am waiting for one of two things:
1) VIX rising with the market.
2) Bonds selling off when stocks are flat to down.

We are not getting either at the moment and that makes me reluctant to short.  Market tops can seem to last forever.  I've learned that a market gives you many opportunities to short a top but few opportunities to buy a bottom.  So there is no rush to short and miss out on the top.  There will be plenty of time to get in there and blast away at the short side at good levels.

I will be taking a blog break for the rest of the week.  Will be back next week.

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