A Tiny Spark in the Bond Market

Back on March 9th, I said one spark is all it will take to spook this market. "Just as the Yen rang the bell back in July '07 -- it started strengthening, showing increasing risk aversion and an end to the carry trade -- the USD could ring it this time with an unexpected thrust to a new yearly high. After all, we have yet to see the commodity trade, Forex market, or the bond market truly snap to attention and show some fear."

It started today.

The Euro contagion is spreading, the US dollar broke through overhead resistance, and our bond market got slammed (shown above). The Yen broke 200 pips. EUR & GBP melted. Oil, gold, platinum, and palladium got hit too. It's clear that something shifted today. Though you'd never know it by looking at the chart of the S&P E-mini below.


As usual, the immediate effects on the equity markets are delayed, while most other markets are flashing warning signals. In the E-Mini, there are 2 Fib zones roughly at 1180 and 1200, so I will not rule out another high. In fact, I hope we get one. But I am getting ready for a significant change in market tone.

I'll leave you with an insightful quote by Jim Rogers. "It's my experience that the things that are always in the press are usually not the things that bring on a crisis. Something else breaks the camel's back, and then the crisis really hits."