Today's Post -

Big rally day, with markets posting a very nice fourth day of gains, closing up 564 points and putting us now up almost 5% on the week. While I would love to say it’s off to the races, under the hood, the relative underperformance of the higher beta components of the market just feels less convincing. Another bond market rally day as well, with 10’s coming down another nine bps to now 4.67%, along with continued yield curve volatility.

Following a slightly lighter-than-expected Treasury issuance report that was more front-end loaded on the curve and QT, which has removed the largest buyer of the front end, we’ve gone from 18bps inverted yesterday morning to now 30bps.

For those citing the historical track record of an inverted curve un-inverting just before a recession starts (looking at you ‘bond king’), the last two days have us in the opposite direction.

Links mentioned in this episode: