Fed-Induced Hyperventilation: A Buying Opportunity

Takeaway: Last week's hawkish Fed minutes provided a nice entry point for investors looking to get long the Long Bond.

Fed-Induced Hyperventilation: A Buying Opportunity - Yellen cartoon 04.06.2016 

The anxiety in macro markets is palpable.

Following last week's Fed minutes, Long Bonds backed up a bit as the hawkish commentary filtered into Treasuries. Meanwhile, the cabal of pro-rate hike regional Fed heads made the media rounds talking up two, even three, rate rises this year.

Filtering out the noise, the reaction actually presented investors with a unique opportunity, Hedgeye CEO Keith McCullough writes in a note sent to subscribers this morning.

"Last week’s hyperventilation about the Fed’s “minutes” (from April) turned out to be yet another buying opportunity in everything Long Bond, Utes, etc. – with the 10yr at 1.82% this morning, all tweets are on Yellen who speaks at 1:15 p.m. EST. Remember, she is a labor economist – that makes next week’s jobs report one of the most important of 2016."

 

While we're discussing those talkative Fed hawks, we'd also add a brief note. Here's an interesting chart via Deutsche Bank. Apparently, the more likely a Fed economist is to appear on CNBC, the more likely they are to have a delusional view of the U.S. economy.

Who'd have thought?