Ok so the bond markets are down today. I was just thinking this morning that in the old days of a few weeks ago if the bond/mortgage markets were up or shall I even say down 8/32 or .25pt it is really no big deal. After all markets go up and they go down. It is as much part of life as another losing season for the Mets.
However, I got this strange feeling this morning because my brain for some unforgiving reason is heartbroken over the fact that the bond/mortgage market is actually down 8/32 or .25pt. How dare it!! Well this is what has come of the bond/mortgage markets for us pathetic souls that look at this crap every day. I actually started to think this market could and would never go down so when we now have what is really just a modest sell-off I think the world is coming to an end. So let’s all help each other accept this harsh reality and understand that even with the markets bucking the recent trend we are still at a sexy 1.48% 10yr and mortgage prices are still as high as Snoop Dogg. All-in-all life is still pretty good.
So why the pause in the bond rally? Take a guess…yes the EU. The ECB’s Mario Draghi (what a great name for a race car driver) pledged yesterday that the ECB will do whatever was necessary to protect the EU from collapse which includes what we mentioned the other day which is “fighting” the unreasonable high Gov’t borrowing cost. So yes this obvious stance by a pivotal member of the EU hierarchy has caused the world to feel a little better about the EU crisis.
Given the limited comments by such EU officials I get why investors are psyched but I am skeptical that this is a easy as publically stating the obvious. This just goes to show how information starved this market is and how much investors want to put the EU in their rearview mirror. I do believe the euphoria will wear off but in the meantime this comment is just what the stock markets needed as investors went out of the flight-to-quality trade of buying US Treasuries and reinvested in the riskier assets of stocks. This is known also as risk-on/risk-off. Another one of those obnoxious Wall Street terms.
Interesting Stat of the Day: The Jobless rate in Spain is the lowest since they returned to a democratic nation back in the mid-70’s. The current jobless rate is 24.6%. So I guess Obama can reference that the next time he tries to put a silver-lining on our 8.2% unemployment rate.