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Breaking Down?

Wednesday, March 24, 2010, 2:34 PM
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I have been working on a report where I examine the Treasury market (and auctions) very closely.  I need to fire off a quick update based on today's market actions, which have my full attention. 

For the past year or so, all the world's markets have been trading like one gigantic casino.  I ascribe this to the fact that market participants the world over have been reacting to the liquidity flood that's been released by the world's central banks.

Nobody really cares if things are overvalued or undervalued.  What they care about is chasing the momentum and not being left out.  Liquidity provides a very compelling explanation for what we've been seeing in various markets over the past year.

Right now I am *this close* to issuing an alert based on a breakdown in the US Treasury market that has resulted in the largest one-day losses in bond prices in quite some time.  They are not yet large enough to cause an alert to be issued all on their own, but rather I am on edge, because for months, the Treasury market has been extremely quiet.  Today it's not.

 

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