There is a selloff going on in both stocks and bonds. There is alsoaeden wrote: ↑Thu Feb 25, 2021 11:52 am> For those unfamiliar with convexity hedging/flows and why it is a
> potentially disastrous feedback loop where selling begets more
> selling, think stock gamma only to the downside. Here is a quick
> primer from Bloomberg: tyler
> There comes a point in any big selloff in Treasury bonds when the
> move becomes so pronounced that it starts to feed on
> itself. Increases in yields force a crucial group of investors to
> sell Treasuries, which in turn leads to further increases in
> yields. Two months into this rout, that moment appears to have
> arrived, and it’s beginning to send shudders throughout all
> corners of U.S. financial markets.
something of a stock rout in China.
As I've pointed out many times, even though 90 years have passed,
nobody has ever figured out why the panic of 1929 occurred on October
28, rather than a few months earlier or later.
I've often wondered if it had something to do with the fact that
October 28 was about seven weeks past the end of the third quarter.
During those seven weeks, Q3 corporate earnings are published, and
there is time for hopes and dreams of investors to die, and to realize
that the earnings are not nearly as high as they had hoped. Hence
they panic.
So right now we're at around seven weeks past the end of Q4. So the
volatility in different markets could be a sign that some sort of
panic is occurring. Whether it's the "big one" remains to be seen,
but the high volatility indicates that some sort of anxiety is playing
a part.