Courtesy of Mish.
I have been warning US treasury bears for quite some time, but I now wonder if we have seen a bit of short-term capitulation.
Before discussing further, let’s first look at a Mish Mailbag.
Reader Rob writes …
Hi Mish
I was thinking that margin calls would be made after today and could pull the market down further by Friday. Do you think margin calls would be made to any degree yet?
Also your article Stock Buybacks Peaked With Stock Market in 2007: History About to Repeat? would be a great post on Business Insider.
Thanks, Rob
Bond Market vs. Equities
Generally I stay away from short-term prognosis. As for equities, all I can offer is general advice: Huge plunges do not happen in overbought conditions, but rather oversold conditions.
Even so, the tendency is to bounce not plunge. Are equity dip buyers about to give up? I don’t know, but nor does anyone else (but when it happens the plunge is likely to be spectacular).
To me the bond market is far more interesting. I am on record as a treasury bull in belief the US economy is far weaker than most think. My position changes from time to time, and perhaps yields are at a short-term bottom.
A few charts may help explain.
$TYX 30-Year Treasuries …
