With rising liquidity fears around the world, at what point is even the U.S. bond market unsafe? U.S. yields are not sliding into a market selloff.
Perhaps today is an outlier.
Or perhaps the rapid increase in German bund yields this week is a specter of things to come on our shores in the days ahead.
Without question the flight to safety has spurred the recent decline in U.S. bond yields and the increase in bond prices, but, with rising liquidity fears around the world, at what point is even the U.S. bond market unsafe?
Tom Lee's market catalysts:
1. European auctions acting better help alleviate fear of spread.
2. U.S. election dynamics bode well for next year.
3. U.S. companies ramp up buybacks given excess cash -- as our report shows need to boost by 28% or $250 billion.
4. In Europe, the ECB or Germany relents.
5. China eases.
6. Mergers and acquisitions ramp up into year-end.
7. Fund managers see market oversold and despite feeling of no year-end catalyst, starts buying due to underperformance.
Germany's steadfast hawkish monetary policy is like a game of chicken in which eurozone sovereign auction results -- on Wednesday, the German bund auction failed, and Italy's six-month sale this morning disappointed again -- make the solution and the wait for investors harder and more expensive.
The European bourses have dropped for 10 consecutive sessions and our markets for seven days.
I am watching with amazement and, naturally, disappointment (that for now there is still no safety net installed in Europe that might stem the debt and liquidity contagion).