My apologies for a short post tonight, but I was out of the office most of the day today knocking out various routine doctor appointments. And while I didn't get the chance to spend the day glued to my computer screen as usual, I couldn't help but get a strange vibe about the market's overall performance.
Aside from gold and equity refusing to fall, Treasuries saw a fairly dramatic sell off with yields climbing nearly 10 basis points at the longest end of the curve. Though yields were higher most of the day, a large portion of the day's spike was seen near the end of the day and appears to have corresponded with the bounce in equity prices. However, I would have expected that a 10 basis point spike in rates would correspond with an equity market that was trading significantly higher, rather than one simply fighting to get back to the unchanged line. This is to say nothing about the beating that the U.S. Dollar Index experience yet again today, which, according to the recent trend, should have sent share prices much higher than they ended up. Again, equity prices were largely unchanged. This just smells like something's wrong in the broader marketplace.
Perhaps my bearish glasses are clouding my view of things, but today's price action along with the relentless move higher over the past month in nearly all asset classes seem to pointing to an inevitable correction sometime soon. Even the most staunchly bullish investors must admit that the pace of the current rally isn't sustainable over an extended period. And with the VIX falling significantly until today, I think that's why you've seen large numbers of institutional investors adding put protection to their positions. It's simply a prudent management practice that is relatively inexpensive to implement at this point in time.
Until tomorrow.....
No comments:
Post a Comment