The collision of global markets and social mood

Monday, October 25, 2010

Is A Negative Yield Really A Positive?

Much is being made of the First Ever Negative TIPS Yield.

“It signals people’s expectation of the Fed being able to create some inflation with the QE program,” said Alex Li, an interest-rate strategist in New York at Deutsche Bank AG.

It certainly does signal an expectation. Just as 89% of S&P stocks over their 50 day MA, and over 90% bulls in EUR, AUD, gold, silver, corn, sugar, and rice markets do as well. You could call it a widespread expectation.

Everyone is expecting the same thing. Therefore no one is expecting the opposite.

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