With the bounce in oil on the OPEC production cut rumour we saw risk appetite return on Friday. You can see that the 10yr yield bounced as bond traders decided to lock in profits and possibly prepare to bottom pick some of the oversold names in stocks. There is still quite a divergence between stocks and the 10yr yield. See if the 10yr can break above the downtrend that started at the beginning of the year.
Just out of interest if we look at the correlation between SPX and JNK we can see that in the absence of QE the SPX may well have been down around the 1000 point mark if I read this correlation correctly. Does that mean the SPX is headed for 1000pts, down from 1861pts where it is now? That would be a drop of 45%. I don't know the answer to that. Only time will tell.
No comments:
Post a Comment