Noise in the Markets, Treasury Sell-Off Edition

I’ve been a little bit out of the market loop for the past few days, thereby

becoming more like Nassim Nicholas Taleb, who famously doesn’t read newspapers.

(The time he saves that way, he says, lets him read dozens of extra books every

year.) On the other hand, given the name of this blog, I really ought to be

on top of what’s going on in the market. And so this morning I found myself

scrolling through 24 hours’ worth of posts on David Gaffen’s invaluable Marketbeat

blog at the WSJ.

Here’s what I found on the subject of the sell-off in bond prices:


7, 12:48pm: "The Federal Reserve isn’t getting bothered about



7, 2:18pm: There’s a "rout" in the bond market.


7, 3:48pm: "When Bonds Become Attractive".


7, 4:18pm: "There is a bearish tone in the Treasury market right now,"

and long positions in Treasurys are being unwound.


7, 4:37pm: The all-powerful Bill Gross, of Pimco, thinks the 10-year yield

could reach 6.5% in the next five years, much higher than the 5.5% he pictured.


8, 9:48am: "Mortgage investors are likely responsible for the sharp

decline in bond prices".


8, 10:18am: There’s a "sudden outbreak of inflation worries".


8, 11:49am: The sell-off might have been due to a rate hike in New Zealand.

Or, not so much.


8, 12:19pm: There’s a bond sell-off, but there isn’t any inflation.

Now this is not in any way a criticism of David Gaffen or his excellent blog.

Gaffen is merely a mirror being held up to the market: this is exactly the way

the market thinks. It changes its mind multiple times every day, it has a curious

mixture of insecurity and arrogance, and what goes around tends to come around.

But for anybody who doesn’t need, for professional purposes, to follow the

intraday noise of the markets, I can’t quite see how any of this information

is of any real use. Trying to extract a signal from all the noise has become,

to all intents and purposes, impossible.

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