Quote of the week

"The chains of habit are too weak to be felt until they are too strong to be broken."

Samuel Johnson - 18th Century English writer

台風6號: 風神

在菲律賓以東的雲團終發展成為今年第六個颱風，但各國氣象台有不同甚至分野甚大的預測路徑，相信與其北方盤據在台灣一帶的副熱帶高壓稍後是否消失有關。只有美軍方聯合颱風警報中心指風神會西進並進入南海，有趣。



以下則是每數分鐘也更新的風神走勢圖。其誤差之大也是近年小見。

Two years yields now at 2.71%

Very quietly (at least from the brokers), without much fanfare, the two-year US Treasuries yields have surged from the lows of 1.31% to 2.71%.



Keep in mind that the rally is way before the Fed Chairman Ben Bernanke made the notorious speech of "strong US dollar." That bode ill to the equity. Something is at work here. Global investors keep pouring money into the commodity sector, pushing up the price of crude oil. That invariably would trigger the inflation expectation backlash. And make no mistakes, global central banks are working 24 hours a day to raise interest rates.

But the wild card would be the Federal Reserve. Though the market is pricing in the rally of the US Treasuries yield, how far is Fed Chairman going to go on interest rate? I bet Fed wouldn't derail the recapitalization of US banks by jacking up the short-term rate too high. Nevertheless, the process of recapitalization would go slow. And that would pressure the banks indirectly since they need to offer higher interest rate if they are in need of money. That means the talk of the town - the perpetuals of the megabanks - are not attractive anymore.