The Risk Here……Forget Taper, Think Snowball
Dollar and T-Bond prices are pointing out a big risk, that risk is that those two markets could take interest rate policy out of the hands of the Fed. There is no question that Ben and the Fed will do their best to keep control, Ben does not want to see an unravelling, at least until he is out of office for 6 months or a year.
We are watching levels of 131-27 on December T-Bond futures and 80.95 on December Dollar futures, levels which were breached in the last three days. If these markets hold these breakouts , T-Bonds below, Dollar above, we see the potential for the start of a snowball decline of Bond and Stock prices.
Some may call us perma-bears but our contention is that events over the next few years will show that we are more perma-risk avoiders, if there is such a term. Economic cycles serve a purpose and trying to manipulate them only increases the risk down the road.