The conspiratorial-minded traders on Friday noted what seemed to be a coordinated communication strategy from the Fed to tamper down on rate hike expectations. The response was a bid in stocks and bonds. The thinking among that crowd was that something bad was happening in the bond market — similar to what happened in the UK — and that the Fed was trying to halt selling.
If that’s the case, it only worked for one day as long bond yields rise 12 bps today to a new cycle high at 4.41%.
Other thoughts on what could be going on:
- Sovereign selling in order to raise money to for currency intervention in Japan and elsewhere
- The implosion in Hong Kong assets has people worried about contagion
- Xi’s consolidation of power will mean inevitable war in Taiwan and China wants to unload Treasuries before it gets sanctioned like Russia
This article was originally published by Forexlive.com. Read the original article here.