Stock Markets had a record week as ES hit new highs and the Nasdaq smashed past 4000 and is on the way to 4100, with a 240 dollar bounce in 2 weeks. The rise has been relentless on the back of falling volume. The wealth expansion for the 1%ers continues as the capital required to push this market up is falling as the markets are alot more thinly traded relative to the days of old, yet the market valuation rose by $900 Bln in the past 2 weeks.
At the same time Bunds and Bonds in general remain very bid despite better news, and hawkish BoE minutes, and slightly more hawkish FED minutes. Yet the appetite to buy everything from Equities to Bonds remains in full force.
Its come to that point where metrics don't really seem to mean anything, I mean looking at the Bund trading mid 150s, with a 10 Year yield of less then 1%, to me makes no sense, despite calming tensions in Ukraine, and better data out of Germany, the Bund, like the Equities have the characteristics of a beach ball in a pool. You try to push it down but it pops back up again.
To say these are tough trading conditions is an understatement, but in these times its a matter of trying to adapt, and in this case its about have more longer term views, as well as the obvious buy US indices blind every day.
Going forward we have Bank Holiday in the UK on monday and then US holiday on the following monday so it is likely that volumes remain depressed till we enter September.
Update on 30Yr Bond Strategy
Its been a rough week for the strategy as we had 4 losing trades and 1 wining resulting in a net 15 tick loss. The slow grinding and low volatility has not been kind to the results, but overall its still up small. Hopefully September will work out better.