http://www.bespokeinvest.com/...first two charts are quite interesting... IBD ibd changed their mkt stance last Fri. macd's...worth watching always as they provide information even though they don't give true buy and sell signals which is why we almost always put quotes around macd buy or sell signals when referring to the macd's. treasury rates up again, dollar up again and through its 50 day ma We thought something was "up" over 3 weeks ago and this is what we were talking about. Not "built in", we were concerned bonds were saying something else.
Prec metals bullishness got to a short term extreme, dollar bearishness got to a short term extreme. The reversal call from here was over 3 weeks ago in the teeth of almost unanimous short term bullishness on pms and bearishness on the $usd. M
Here is the deal. Either the bond market is rebelling against Bernanke's QE2 or, the bond market is anticipating faster economic growth which will lead to higher inflation and interest rates and is discounting both now in marking bonds down-raising interest rates including higher rates on what QE2 is buying to drive down rates. If it is the former...Bond market rebellion against money printing QE2, then Bernanke has a problem. A potentially very big problem But, if the fast rise in rates is a result of anticipated faster economic growth and higher inflation...Then Bernanke last Friday started a $600 Billion money printing and treasury buying spree that is not only un necessary, it may be counterproductive. Guaranteed that Bernanke is aware of these two possibilities, neither of which is so far good, because both lead to the same conclusion at least so far which is... The Fed should not be doing QE2 or as stated weeks ago, the bond market may be saying "Fk You, QE2".
Which presents a problem for Bernanke. What does he do when he just started a $600 Billion, 6 mo anticipated money printing and buying spree of Treasuries that the market says is either un necessary or possibly counterproductive. He can't just abandon it after a week or two saying....Silly us, a mistake. Bernanke is in worry world right now despite any public pronouncements otherwise. All this could change...........the bond markets could start behaving and qe2 goes off without a hitch and provides benefits but that's speculating about what could happen. We'd rather keep the focus as we have for over 3 weeks on what IS happening. And what is happening is not what the consensus was in bond land, pms, and the dollar 3 or 4 weeks ago. It is also not what Bernanke and the Fed wanted or expected.
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