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Monday, June 24, 2013

Market Thought... great rotation, still waiting

Bonds are selling off, and the 10 year rates started to rise.

A bit of perspective on the move. The 10 year rate is near levels of last March.

The SP500 is obviously already higher then it was last year.

Powder was already being put to use expanding the SP500 multiple.  Only recently, in the last few weeks, have sizable bond outflow figures come to light.

Will these funds make their way to the equity markets? Don't see why not. The SP500 is already at initial levels of long-term support.

Side note: Friday was a bit frustrating. Its a day I would normally have loaded up on bank stocks via GS and BAC. But the threat of increased capital ratio made me hesitate. But the more I thought about the hesitation, the more I kept thinking about the increase in bond spreads the banks will benefit from. (Rising rates as the Fed Rate stays constant.)  And the slow unwind of the GSEs. Those profits are going to go to the private sector. The hesitation may have been a mistake.

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