This morning will be a panic attack for macro tourists, who unfortunately for them, still watch CNBC or whatever else.
They’re just realizing that interest rates are breaking out. But as you can see from this chart, it’s pretty straightforward.
It’s been up, up, and away since we said interest rates were going to break out to the upside in #Quad2; at first slowly, then all at once.
That’s exactly how risk moves – we made the same call in 2013. It’s been very obvious to us what’s going on here.
And no, it’s not the end of the world for stocks!
Obviously the other big thing happening here with this move in bond yield is we’re getting paid.
Long $TLT? No. We were long Long-Term Treasuries (TLT) for two years; we’re short $TLT and long of Steepeners (IVOL).
On the long side, $IVOL has been monstrous against short $TLT, so we’re going to stick with that.
Oh, and the yield curve hit a new cycle high, at +125 basis points.