At this point, I’m just about ready to retire because I am seeing things I have no memory of or have never seen before.
The fell by more than 3.8%, a monumental move. It was either a newfound flight to safety or a flight out of US assets altogether. But whatever it was, the money quickly left the US yesterday and returned to Switzerland.
But that wasn’t all because the strengthened by more than 2%, while the also strengthened by more than 2%. It would seem that every currency is now seen as either safer than or, more importantly, is seeing a massive flight of money out of US assets that is heading back home.
This is probably why Treasury yield continued to surge, with the closing yesterday at around 4.87, its highest close since mid-January. Given the market dynamics, the 30-year could not only be heading back to 5% but to a new high of over 5.1%.
More interestingly, the recent rate rise has much to do with the increase in the term premium again. The term premium is back to its cycle high. This is investors’ way of saying they demand higher rates in return for the risk.
I will say that I was surprised to see that the was down only 3.5%; given some of the flows in FX and Bonds, I would have expected it to be down more. It was down more at one point, which amounted to about 6% around lunchtime, before returning in the final half yesterday.
When looking at the , it appears to have a big bearish rising megaphone pattern, and at least, based on that pattern, it would suggest that all the post-tariff relief celebrations are probably gone by today.
See ya Sunday, most likely…
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