Bonds are caught in a sort of tug-of-war between those who are viewing the surge in crude and liquid energies as having an inflationary impact or at least feeding into inflationary expectations and those who view the same event as a sort of tax on economic activity that will curtail both business profits and consumer spending and act as a drag on overall growth.
Throw on top of that the "safe haven" trade due to unrest in the MIddle East and North Africa, or MENA as some have aptly named it, and you have all the ingredients for a volatile mix of yo-yo like action.
If that were not bad enough, you then get apparently conflicting comments coming from some of the various Federal Reserve governors concering whether or not QE will be extended beyond June or perhaps even curtailed prematurely.
It is enough to make a bond trader decide to become a fishing guide on a nice quiet lake somewhere!
Here is the daily chart including today's action. You can see that the bonds have temporary stalled out near the top of what was the former seven week trading range from December 2010 - February 2011.
You might note that I am using the June 2011 contract for the analysis versus the Continuous contract chart because that one includes the transition from the March Contract to the June contract as the most active month which gives a bit of an exaggeration to the downside move. I am going to post both of them so that you can see the difference.
Interesting how everything points to a bond devaluation or even a collapse yet it keeps on finding bids propping it up.
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