Bonds sold off aggressively today, for a combination of reasons that are tremendously unsatisfying in a traditional market-watching sense. For example, it would be nice if we could point to something tidy and logical like all-time high stock prices, or the stronger Consumer Confidence data, but at the very best, these were merely supporting actors in a subtler, more complex drama.
Actually, it's only complex inasmuch as it's not the first thing most market-watchers think of when they see moves this big. It's actually fairly simple as long as you can accept that something so simple could actually cause so much movement.
Long story short: a small imbalance of positivity had built up over the past 2 weeks. It wasn't too troubling in and of itself, and it could have turned into even more positivity if certain political headlines had been more scandalous to start the week. Not only has there been a relative absence of panic-inducing political headlines, but several other factors conspired in small way to tip over the dominoes that had been precariously arranged by the aforementioned imbalance.
In other words, bonds got sucker punched. Wrong place, wrong time.
This is best explained in the attached video for MBS Live members, but here are some 'in-a-nutshell' bullet points:
Join Now or Login to Post Comments