Sep 15 2008
Reaction to Lehman and Merrill - Strong, but not overly so
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In case you were wondering just how crazy things are in the markets, a look at the Treasury market will help. Check out the changes since Friday.
Flight to quality is driving the Treasury move. It’s also got Gold up. Oil is down because of major economic concerns. The Dollar move is the real thing to watch. It’s under pressure now, mostly because this is so far a US issue, but given the moves in some of the European banks (I saw HBOS down 25%), don’t expect it to remain that way.
One question I’ve heard a couple of times is “Why isn’t it worse?”
Keep in mind a couple of things. First, traders have been preparing for this for a while. Second, the financials are a much reduced proportion of the market. Had this sort of thing happened a year ago it would have been a huge negative reaction.
Here are some other posts which might interest you:
- More market craziness - negative swap spreads
- BIG moves to the upside on Treasury yields
- Technical Trading Dead? I Think Not
- Today’s Trading Look-Back - April 30, 2008
- My thoughts on the election
