Mostly: Classical

[Andy R]

What is the market telling us here.
I will hazard a guess it goes something like this. Worldwide inflation is changing the landscape and while we did have all economies strong ( a rare occurrence) we may get all economies weak at the same time as well. Worldwide economic weakness yet inflation, not dealt with by Keynesian economics, the west may try vigorous co-ordinated central bank rate hikes to stamp out inflation, a long painful process as was the last. Last time was the first time and who really knows? A flaw in Keynesian economics.

So economy languishes while unemployment soars.

Bond traders are trading on such a scenario from what I can see. Less and less do they think central banks will print, monetary inflation. Inflation first, jobs second. An interesting bet to say the least.

To me one of the most important lessons for trader is that you are NOT smarter than the market and should listen to it rather than your emotions or knowledge. It is always right. The true arbitor.