Why *Only* That Specific One?

Why does any of this matter?

That UST selloff wasn’t reflation – it was illiquidity at perhaps the worst possible moment. And, I think, it shows just how fragile the underlying situation really is: everything going right except this one [Fedwire Feb 24] seemingly teeny, tiny thing. But that’s the point; appearing to be nothing, like Mandelbrot warned, how quickly it spiraled into “something.” A globe-trotting something.

That is fragility.

It may not end up meaning much for more than the past seven weeks, a short-term interruption eventually forgotten. Then again, when the herd turns, global reflation fragile as it always is (that’s why it is reflation and not recovery), we have to keep a close eye on the potential for more than a short run curiosity. Curves remain low and flat for very good (meaning not good) reasons.

To put it into 2017 terms, the curves/global markets are pricing the chances of something going wrong to be much, much higher than everything going right. Sour, not soar. That’s how despite vaccines, Uncle Sam, TGA, bank reserves, etc. etc., global bonds have moved so comparatively little, thoroughly unimpressed no matter how many thirteen-digit programs applauded even feared (inflation-wise) in all the mainstream.

Unlike most, they’re at least aware of, and wary about, the rippling implications for what really must have happened late in February.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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