Right now we're back inside the BBs on TLT, with more volatility expected.
If bonds just break down here, we might do well to prepare for a parabola of 1999 proportions on the S&P that will leave us all scratching our heads. I'm starting to wonder if this could happen. A serious hit to bond portfolios could result in an equity buying panic...But a lot will just find itself back in money markets doing jack, except maybe shoring up bank balance sheets to get us through a bad 4th quarter this year perhaps. Some wacky stuff is going to happen, as if we haven't had enough, that much I'm sure of.
More likely is that the S&P should correct a bit here, letting the long bond holders down easy. I think that's what "they" would want. The Fed didn't telegraph enough, so while Bernie clearly wants us to buy stocks and feel rich, too much too fast will not be in anyone's interest, especially the Fed's, which honestly, truly does want to see better unemployment numbers, not just asset inflation...Any more Middle East news is also clearly going to put a floor under long bonds. Really, I'd expect "normalcy" here as the probable outcome and thus normal levels of equity and bond market volatility, but be aware the financial regime is changing and so will the market.
Joy Division - Something must break
(oh, someone tell me how to embed videos...!)
Edited by sluzbenik1, 18 September 2012 - 10:50 PM.
