Stock Rally Hurts Government Bonds

The risk trade is back on. The 25% rally from the bottom is starting to take a bit of a toll on the safe-haven assets, like government bonds.

WSJ: Major government bonds had a rough day Thursday as a rally in global stocks spurred risk appetites and cut flows into low-risk government debt markets.

Investors sold Treasurys and government securities from Germany to France to the U.K. as market sentiment was lifted by a commitment from global policy makers to tackle the recession and as U.S. accounting regulators eased rules on banks to value their soured assets. U.S. data over the past two days also raised hopes that the economy, while still weak, may show signs of stabilisation.

For further evidence that the appetite for risk is coming back — and that this rally isn’t just a short-covering rally — there was an actual successful IPO yesterday. And it was an internet stock from China, And it shot up 26% on the day. When was the last time you saw something like that get pulled off?

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