The market appears to be super-snoozy. But that’s just if you’re looking at stocks.
Treasury rates are picking up.
As one bond trader said to me this morning via IM: this is a pretty sneaky UST selloff.
Indeed, here’s a 3-month chart of 10-year yields, via Bloomberg.
And that doesn’t include today’s move, which has sent the 10-year yield above 1.80%.
A theory that’s going around is that this has something to do with the Fed not doing QE, and thus not doing much to suppress rates. But we’re sceptical, since rates have tended to rise during QE.
A much better theory is that this is a combination of improving economic data and the removal of European tail risk … a trend that resulted in massive safe-haven inflows into U.S. Treasuries.
In fact, if you look at the top chart, the bottom in rates occurred right around late July, when Mario Draghi famously talked about saving the Euro, and making efforts to cap rates.
A quick look over to the same chart for German Bunds—which moved based on the same safe-haven slows—shows the same thing, that yields bottomed in late July, right when Mario Draghi changed his tone about the role of the ECB in ending the crisis.