Yield Spike

We highlighted the potential risk in our post yesterday,

Druckenmiller On Bonds

If you listened to the Druckenmiller interview we posted on New Year’s Day,  he thrives in bear markets, not by shorting stocks but being long bonds.  Shorting stocks in a bear market, though more profitable,  he has learned is riskier due to the higher propensity for nutcracking short squeezes.  Druck also worries about the level he is buying at.

Nevertheless, this confirms our suspicion the bond market has been hijacked by stock bears and short sellers.  How far they push down yields is anyone’s guess.  We just wonder who they are going to sell to when its time to get out.  They couldn’t be betting on a central bank takeout in a new round of QE?

Unexpected bond market volatility could be the Black Swan of 2019.   We will flesh out our thoughts in a later post. – GMM, Jan 3rd

U.S. 10-year yields are climbing the most in a year after a blowout jobs report and as Fed Chair Powell said he's willing to reconsider the balance-sheet run-off plan if necessary. pic.twitter.com/m1gZwtXDLT

— Lisa Abramowicz (@lisaabramowicz1) January 4, 2019