So the obvious question is will yesterdays lift be preserved or move higher before it might unwind next week?
The move yesterday was what I was expecting to occur earlier in the week resulting in a bigger move than we have seen so far. This kind of mark up is common. If yesterday’s move up sticks, money managers, like me, will get paid a little more. I am not big enough to move anything but some IMs are. They move may have been that simple.
This same general idea is why I have thought that we might see a rally sometime this fall. I still think we can move higher but time is running a little short.
One recent obstacle to this thought is that a couple of my counter strategies/low correlation to US themes have been working very well lately, particularly gold and Australia. While anything could happen I think that higher equity prices would be tough if gold keeps going toward $500.
The treasury market at its current level is not an obstacle but what it may be pricing in could be the obstacle. It is moving toward horizontal or inverted. New 30 year paper could help here but there is visibility with this that should monitored closely.
If the curve does invert there will be, based on history, a big time lag before it hurts equities. Investors will have plenty of time to adjust portfolios.