Monday, January 5, 2009
More and more it's looking like November was the bottom. Swap spreads and junk bond yields are down signficantly. Panic is subsiding and equity prices are moving higher. Commodity prices appear to have bottomed. 3-month T-bill yields were negative a month ago, and today's auction came with yields of 15 bps. 10-year Treasury yields have jumped 45 bps in just the past week. The price of safety is going down, and the prices of risky assets are going up: with mountains of cash out there still yielding almost zero, this could turn into a panic rally pretty quickly.
Full disclosure: I am long IVV and HYG as of this writing.
Posted by Scott Grannis at 11:12 AM