Reality Catches up with the Bond Market

You can fake a lot of things in the stock market. The bond market, not so much. Eventually, reality catches up with the narrative. If the two are as divergent as they’ve been over the past three months, the reconciliation can be ugly.The euphoric breakout we saw following the sharp reversal on Nov 1 was driven by algos, and now it’s failing thanks to algos. The appearance now, however, is that it’s a backtest of instead of a continuation of the falling channel from Sep 2018.Business investment fell more than expected in December, dropping 0.9% and ending 2019 with a meager 0.8% unadjusted gain. It’s not the sort of numbers you would expect if this were “the best economy ever.”

Futures are doing what they do best after a horrid day yesterday, putting in a algo-driven bounce.If the charts are correct, though, this is merely a pause with additional downside to come.