So much for thought we wouldn't go below 139 in the Bund, but despite widespread anticipation of this move from the FED we reacted with a big sell of in the Bunds, which goes against what you would fundamentally expect, and we are trading multi month highs in all currencies against the dollar. The EurUsd is trading above 1.31, given that 9 days ago we were 1.25 which is a huge move!
Spreads are inching up as you would expect too, but not getting affected as much as the longer end of the Yield Curve.
So here is the facts, Nasdaq at decade highs, European Indices at year highs, Dow at 4 year highs, yet the economy is massively weak, this move by the FED was on the back of a very weak employment picture, and with the 3rd round of QE in the works, one has to be aware of the potential inflation risk down the line.
You can say that stocks are the only investment with yield given the low rate policies from the central banks, but do i think this is all massively overcooked! The answer is yes, and so I am expecting some correction going forward, although I dont think this will happen till next week as I cant see people wanting to be short over the weekend. Either way, its all exciting stuff! Have a good weekend
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