I made some fantastic stuffing this year. Just like mom used to make, and probably very much like she’ll make when we drive down to do the Thanksgiving raincheck dinner with the other half of the family. I haven’t had stuffing that good in a while and indeed found it difficult to stop eating it, especially in the middle of the night last night.
Punitive exercise implications aside, bond markets are going through something similar right now. They haven’t had a rally this good in a while (as evidenced by the first meaningful break under 2.30 of the entire month on Wednesday) and indeed found it hard to stop overnight. Their stuffing, however, wasn’t homemade, but imported from Europe.
After reaching .733 on Wednesday, German 10yr yields extended gains to .699 by the end of Thursday’s session. News that OPEC wouldn’t cut production to stem the tide of sliding oil prices looks to have been the pivotal consideration for bond markets and beyond. Then today, weaker data out of France and Italy helped European bonds maintain most of their aggressive rally.
Technical levels like 0.70 in German Bunds (10yr) and 2.20 in US 10yrs may be analogous to the line in the sand where “too much of a good thing” starts giving way to second thoughts. After all, Bunds hit .699 and bounced modestly higher in much the same way US 10yr yields hit 2.199 overnight before bouncing modestly higher this morning.
As such, the day begins with solid gains, but also with trading levels retreating somewhat. Hopefully no one gets sick.