Built In??...
When does "news is built in" become "something else"?
We suggested nearly three weeks ago to watch for the "something else" as the bond market was starting to act like it was not going to fall in line with Bernanke's wishes.
The consensus at the time was merely that QE2 was already "built in"
QE2 was announced with a long lead time and commenced at the end of last week with the expressed intention of lowering yields on notes and bonds, mostly of duration 10 years maturity and less.
So how's it going in bond land?
Not so grand as it turns out.
While one can not say yet that the bond or note market is outright rebelling, it is for sure... not complying.
The yield in the 10 year TSY rose 11 bpts [Fri] to 2.76%, the biggest increase since August.
The yield in the 2 year note jumped the most since April.
While the Fed is not buying 30 year bonds, the yield on the 30 year continues to rise, the chart of the 30 year bond [price] continues to be in a downtrend.
The 30 yr. yield bottomed/price peaked almost exactly co-incident with the low in the stock market around Aug 26th.
We continue to suggest watching the 30 year [stockcharts.com $USB] as it's behavior will tell a lot about what is going on.
That "what is going on" may include several things including anticipation of faster economic growth [and higher inflation] and/ or a rejection of the Fed's continued printing of money from thin air thus devaluing existing money.
One should also watch the 10 year bond yield $tnx. As of Friday, that chart is in an uptrend, the exact opposite of what Bernanke is trying to achieve with QE2. The chart now shows a higher low and a higher high [in yields] which means the 10 year Tsy yield is in an uptrend until that uptrend gets violated.
As always, this is a good time to keep eyes and ears open to what the markets are saying....not what the pundits and "experts" are yammering about.
Fabian
Market Data 
Markets 
AI
