It’s the End of the Beginning of “Normalization”
Cheer up, the worst is yet to come!
– Mark Twain, Those Extraordinary Twins (1894)
The yield on the 10-year U.S. Treasury note hit seven-year highs this week.
It made the biggest single-day move since November 2016 on Wednesday.
It’s been above 3% for two and a half weeks, and Wall Street is already talking about new stages of cycles and new trading ranges.
If you’d clicked that link just short of noon on Friday, you’d have seen a big red banner across the top of the page blaring, “Dow drops more than 250 points as rates pop on jobs report”…
Bubblevision nearly broke itself, between Imperial Washington’s Kavanaugh Kvetch and the trickle of blood on Wall Street.
It’s a breakout, alright, but it’s just another of the hot-chyron variety.
Yes, the 10-year is at 3.23%, and it’s just another stop on the “normalization” path.
Indeed, Fed Chair Jerome Powell told PBS this week that interest rates are “still accommodative,” that monetary policy is “a long way from neutral.”
Yet, here we are, a “MARKET SELL-OFF,” brought to you by CNBC… because the benchmark risk-free rate of return ticked up 20 basis points.
Folks, this is just a great aunt of yield shocks, maybe a close cousin…
Where the Great Disruptor will ultimately lead us is anybody’s guess.
But it’s a far worse place than either Imperial Washington or Wall Street imagines.
And his Trade War will have a lot to do with it.Read More