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Friday, February 26, 2021

Bond Market Panic

There has been a fairly impressive rout in the bond market, with all the appearances of some relative value strategies blowing up. My argument is that this is just markets being markets -- bond bear markets are not leisurely affairs, time spans are compressed. This behaviour seems to be the one that inflicts the most pain on users of technical analysis. 

I have seen calls for the Fed to intervene to prevent some sort of catastrophe. My argument is that just reflects an obsession with the Federal Reserve among market commentators. Absolute yields are low, and it is hard to believe that a slight increase in discount rates will meaningfully deflect the economy.

I expect that I will go through the data this weekend to see what things look like after the repricing,

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