A common criticism of the financial media is that it’s too stock-centric.
The day is defined as being good or bad based on what stocks did. Currencies, bonds, precious metals, and other commodities get their segments, but are never the meat of the show.
Today offers a really good example of why that is.
Stocks are straightforward. When bad news hits, stocks dive. When good news hits, stocks are up. Sometimes things get wonky, but it’s usually not that hard to figure out what makes the market tick, especially when the moves are dramatic.
Other markets are frequently more counterintuitive. It took the media a long time to explain why the yen and JGB rallied after the Japanese earthquake. Today after the S&P downgrade of US debt, it wasn’t immediately clear why the dollar rallied and why Treasuries ended up HIGHER than they were before the downgrade.
Since the explanations aren’t simple, they’re ignored.
For what it’s worth, CNBC did draw a line between the S&P downgrade and higher bonds. If the US government goes into austerity mode, that will probably slow growth, which is deflationary, which should be good for the bond market.
it was actually interesting to hear this line repeated on CNBC all day, since it’s in contradiction with the typical GOP line that low spending = pro growth, a line that usually goes unchallenged on the network.