Saddle Up Muchachos

Evil Speculator warns us about the ides of March:

Soothsayer. Caesar!
Caesar. Ha! who calls?
Casca. Bid every noise be still: peace yet again!
Caesar. Who is it in the press that calls on me?100
I hear a tongue, shriller than all the music,
Cry ‘Caesar!’ Speak; Caesar is turn’d to hear.
Soothsayer. Beware the ides of March.
Caesar. What man is that?
Brutus. A soothsayer bids you beware the ides of March.105
Caesar. Set him before me; let me see his face.
Cassius. Fellow, come from the throng; look upon Caesar.
Caesar. What say’st thou to me now? speak once again.
Soothsayer. Beware the ides of March.
Caesar. He is a dreamer; let us leave him: pass.

William Shakespeare, “The Tragedy of Julius Caesar,” Act I, Scene 2

All eyes are on the Fed this week and how it will respond to the bond vigilantes who have effectively thrown down the gauntlet and are now waiting for the FOMC to respond in kind. First up let me be clear that the ZB trading near 155 is not that unusual which should be quickly apparent when pulling up a long term chart.

What’s worrisome is velocity of the current sell off and in particular the context in which it’s happening. The swap rate index which you are now are familiar with continues to climb higher by the day.

Nobody really knows what exactly this means as the OTC swap rate market is not something us mere mortals will ever be given access to. But clearly something extraordinary is going on and it can’t be good.

Meanwhile the VIX has descended back toward its new old baseline, but I for one won’t be getting too comfortable down here as this situation appears to be temporary.

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