Authored by Jeffrey Snider via Alhambra Investment Partners,
After the 2013 “reflation” selloff, it took just about two years for the treasury market to revisit (10s) the 2013 lows (rates).
In all that time, each and every bond selloff was met by the same assurances that “rates had nowhere to go but up” when instead the underlying fundamentals (economy as well as money/liquidity) were the same throughout.
"The bond market needs to hire a new public relations firm," says former fund manager Richard Breslow, reflecting on the panacea of negativity surrounding the weakness in global bond markets. His suggestion is simple - "get over it" - bond yields are going higher and you better get used to it, it's just needs to be seen for the 'positive' that it is...
Via Bloomberg,
For dip-buyers in the S&P 500, 2017 has actually been a tough year... because there hasn't been any.
As JPMorgan notes, 2017's 3% intra-year decline is the smallest since 1980 (tieing with 1995 which saw a 34% return)
This 3% drawdown (for now), continues a 6 year streak of drawdowns that are dramatically below the longer-term average of 14.1% drops intra-year.
But what happens now that Central Bank balance sheets are set to stop their expansion?
After falling for the first time this year last week, Baker Hughes reports US oil rig count rose once again (as perhaps Cindy impacted drilling last week) for the 23rd week in the last 24.
With The Fed is full 'taper' mode and The ECB hinting, the world is left to rely on Kuroda to single-handedly buy-the-dip in stocks and maintain bond yields at the mandated level. With Japanese stocks fading in the last two weeks (as bond yields spike), it appears the ubiquitous 'hand of god' has disappeared...
And judging by the biggest Japanese equity fund outflows in 8 years, the fear is spreading...