The Hunt for Pristine Capital

Boring Bonds become your best friend.

Bonds are the Truth. Bond market is the largest traded market on the planet. Steeling a line from EF Hutton, when the bond market speaks, everyone listens. That is exactly what is happening this morning.

Dow futures are down more than 500 points this morning along with all other index’s expect the VIX, Lumber, Bonds, Gold, and the US Dollar.

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German 10yr Bund is down 2.21% this morning. This is and will continue to be a flight to pristine capital.

Quick bond refresher. When Yields go down, bond values go up and when Yields go up, bond values go down.

So far this morning the move to liquidity is the move smart money is making.

Bond % changes around the world this morning:

• US 10 yr Treasury: 3.46%

• UK 10 yr Gilt: 3.31%

• German 10 yr Bund: 2.20%

• Italy 10 yr Bond: 4.148%

• Frances 10 yr Bond: 2.746%

• Australia 10 yr Bond: 3.25%

Does the Fed have the power to stabilize this market? I personally don’t think so. A move lower in Fed Funds Rates will take time to filter in to the markets and remember that the previous eight rate hikes are still filtering in. Typically it takes 6-12 months for markets and the economy to feel the effects. Markets have lost trust in the Fed.

Subscribers, here’s what I’m doing.