PULLING THE PLUG ON THE STIMULUS BASED RALLY?
3 November 2009 by TPC
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Futures are tanking overnight after the RBA raised rates for the second time in a month. The move could be the beginning of a global Central Banking trend. Of course, everyone knows the recovery in the U.S. is mostly stimulus based so any hint at rate hikes could send the wrong message at this fragile juncture in the recovery process. The Fed is on deck Wednesday.
Flatteners have a good risk/reward. They can profit from a tightening cycle by betting the curve would bear flatten, while they can also profit in the case of continued deflation where long term yields drop.