Thursday, September 18, 2008
Well, I said this couldn't go on much longer, and it didn't even last a day. News that the government is considering some sort of RTC type solution for the subprime crisis sent bank stocks sharply higher. Gold gave up all its gains as people began to reassess their fear that bank failures were going to be massive. The VIX has dropped back to 34, and 10-year Treasury yields have jumped 11 bps. That leaves the VIX/10-yr ratio at 9.8, substantially below its high this morning. There will be plenty to worry about in coming days, though, since creating another RTC won't be the work of one day, and the details will likely be in flux for awhile. But it does look like the worst of the panic is behind us.
Posted by Scott Grannis at 12:30 PM