UPDATE: Crude Higher, But So Is The 10 Year Yield.
From Greg M
Lions and friends…
Crude oil is higher by nearly 3% as I am posting this. Between “contango” and what I believe is a long drawn out “bottoming” phase… on top of speculation of what OPEC may or may not do, crude has certainly been on a WILD ride.
With that, bonds are selling off and the 10 Year yield is moving higher, which in turn is putting some pressure on stocks.
As I said in the video below from this morning, I expect that the Fed. will soon begin yet another phase of MASSIVE bond purchases- and this will push the 10 Year yield right back down. A sub 4% 10 Year is certainly possible, and soon.
Just because the Federal Reserve is propping up the market right now, making it appear that things are about to get even more bullish, doesn't rule out the fact that all of this comes down to the next interest rate decision. When the data is insignificant, but the data screams disaster, the Federal Reserve can mantain stability in the markets by doing nothing. When the Federal Reserve makes a decision this is more or less "reactionary", which tells the market that the Federal Reserve is doing something different. The market doesn't like this uncertainty, in uncertain times, especially when bad economic news fuels a bull rally based from inaction of the Federal Reserve. Reactions mean the Federal Reserve is forced to make a decision, and then this forces the hard responsibility that the Federal Reserve claims to offer for the economy. If the Federal Reserve want to keep markets stable, they must keep pausing, but their assets are draining too fast that they can't afford to pause.
I’m getting a fucking headache!