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View Diary: Markets hated the tax cuts for the rich (288 comments)

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  •  Or maybe... (0+ / 0-)

    it could mean, in the collective, something else. I don't know and neither does anyone else. What I do know for sure is the bond market's concern is entirely for their money. No one, and nothing else.

    We've heard nothing but the spin on why the market did what it did, and that spin always goes with whatever interpretation fits what one already believes. There are also other reasons some bond desks sold that day. For example, bonds prices have been as high as they can get for a long time, unless bondholders are willing to accept negative returns. So when the price of something is as high as it can get, which direction will be the next price move?

    I would also wager there are more than a few bond desks who calculated that this is the needed second stimulus, which increases the chance the economy will start to accelerate, which relieves the Fed of it's need to pound interest rates into the ground. With more economic activity interest rates must necessarily rise ( and bond prices must fall ). Early adapters in other words, acting on what they believe comes next year. That scenario is completely opposite from the conclusions making all the front pages.

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