Case Shiller printed at -4.5%.
Double Dipper.
Double Dipper.
Despite our agreement with the general premise of the curve shape changes that the Fed is likely to undertake in any QE3 (Operation Twist or Operation Torque as we posted earlier) should it occur, we are also in agreement with our earlier guest post related to both the hurdles and anticipated impact of further quantitative easing. It is becoming abundantly clear that market participants are at best befuddled (as Pisani has been so eloquently indicating all day) and at worst missing the point dramatically as fixed income markets are turning their heads to any action by the Fed while equity markets remain more delusional.
Whether the combination of high short interest, month-end window-dressing, HFT, and hopium is to blame, the rebalancing across asset classes that is supposed to be what helped us rally so impressively in the last few days on vapor-thin volumes does not appear to have been 'rebalanced' in bond markets.
This disconnect, and one we have been pointing to for a few days now, is nowhere more evident than in the hope vs reality of the 2s10s30s butterfly and the S&P 500 futures market. We wonder who will be proved correct?