Posted by: jhamon | December 30, 2009

MysteryHedgie: Keep A Wary Eye On The Yield Curve…

The US Yield Curve steepener, a highly populated and profitable position in Q4, represents the best of the Fed’s efforts to keep short rates low and the Federal government’s ability to spend huge sums (see below) in what has been since March, a mostly successful rescue of asset prices and financial markets.

The strong $ of recent weeks (the broad extent of $ strength in 2010  will be an important theme) is a vote that curve steepening is working but also a threat in that it may encourage the markets to price in tightening (short end) that the Fed prefers to defer til 2011, or it could draw asset allocation/rebalancing into  the long end.

With conviction light and equities very extended (vulnerable?), expect stocks and commodities to be sensitive to yield curve moves as 2010 begins.

Happy New Year to all… MysteryHedgie

MysteryHedgie: Keep A Wary Eye On The Yield Curve

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Responses

  1. nice info, i will visit this site more often…
    thanks for the informations from this blog…


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