As the Fed Pulls Away From the Mortgage Market, Investors Reach for Yield
Brian Kelly submits:
We have highlighted the unusual negative swap spread relationship in the fixed income market. The inversion continued down the curve to the 7 year maturity – which makes the 7 year auction even more important. The message from the markets is clear – Uncle Sam is a worse credit than those evil CEOs. Taking a step deeper into the pool, we view the strength in swaps (lower yield) as a sign investors are still betting the Government is the ultimate put option.
Has the Greenspan Put Become the Bernanke Put?
While Alan Greenspan was Chairman of the Federal Reserve, his monetary policy was affectionately referred to as the Greenspan Put. As a refresher, the Greenspan Put referred to the Chairman’s inclination to respond to every economic hiccup with a rate cut. Some have argued (and we would not push back) that the Greenspan Put was part of the reason risk was embraced and consequences were ignored – if the Fed was always there to catch the markets fall then why not buy!
Investing, Long Term Investment, stock market | admin March 25, 2010
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