The collision of global markets and social mood

Wednesday, June 11, 2014

Three Things

Three things technical: the 10-year, the gap, and the arc.

Three things newsworthy: GOP insider Eric Cantor defeated by a Tea Party candidate, a failed bond auction in China, and a rumor of an earlier end to QE.

The 10-year broke below 124 and has popped back above it. The S&P looks like it wants to fill the 1940.46 gap but is still feeling corrective. If that's all it wants to do is fill it, the arc will remain intact. However anything below 1922.93 would be a red flag for it.

But that wouldn't be such a bad thing.

Instead, it looks like the tone may come from the 10-year: its false break thus far may set up a quick S&P gap fill and then a reversal. But a continued trend of lower prices in the 10-yr could start to pressure markets worldwide.

The full moon is 12:11 am on Friday, the 13th . . . ooooh, spooky.

Never really was fan of Cantor: never trusted him.

Funny how the Chinese yuan is repeatedly mentioned as a potential new reserve currency and yet they can't even float some bonds at rates 135% higher than the German 10-year. So there's your verdict.

The Fed rumor is interesting because it immediately makes Janet look like an amateur who let the truth out too soon (recall her slip that Fed rates could start to rise in 6 mos.) then had to lie about it.

If the Fed really will finish QE by August, perhaps this is what the 10-year is beginning to tell us: that, yes, rates will soon be headed higher, and the Fed will have to follow them -- like they always do -- because they really don't control the bond market at all; they are just assumed to control it.

All they control are the expectations of the gullible.

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