Paging Dr Fibonacci!
10-year yields have broken their 50% retracement of the drop from just above 4% to the 2.35% lows seen in early October. Next resistance for yields is the 2.33-2.38% area.
Some say this back-up in yields is the market repudiating additional US tax cuts and foreign investors are dumping bonds. With metals falling sharply today, I don’t buy the argument that there is a loss of confidence in Treasuries.
I argue it’s a market unwinding another fixed income bubble blown up by the Fed. Since the dollar fell on the QE2 trade (at first) it should benefit from this panic unwind…
