Market Journal: The Bear Wrestled Out of the Trap

Discussion

Yesterday was a bear trap, but a really weak one. Fixed strike VOL was up yesterday, breadth was decisively negative, and now today Larry Summers is out talking about UST 10s averaging 475 bps over the next decade (Summers is part of the Fed’s unofficial communication team, so that’s just more paving of the way for a hawkish Powell on 8/25). The bounce this morning was/is absolutely anemic, and while I think we ultimately will get a sturdy bounce before the real decline begins, it’s clear that’s unlikely to be from current levels.

Exhibits