Today is Veterans Day.  I ask all to remember those who gave the ultimate sacrifice in your thoughts and prayers.  It is because of the fallen is why we are able to live in this incredible country where all can write and say almost anything without the fear of government knocking on your door.  Thank you!

The bond market is closed today thus suggesting equity volumes could be muted.

Speaking of the bond market, many are now beginning to acknowledge the possibility that Treasury yields had perhaps fell to low and some are attempting to explain why such occurred.

I am ardent believer in the phrase it is not what one does but rather why one does it.  I am also an ardent believer in the philosophy that norms and means are significant and are important to understand where one might be going for the vast majority of events the environment reverts back to or close to the mean.

Real negative interest rates are an abnormality.  The occurrence of such is about 5 standard deviations away from the norm.  In other words the odds of negative real interest rates are about 0.3%. In other words 99.7% of the time negative real interest rates will not occur.

At this juncture, based upon the PCE, the yield on the 10-year is still negative.  Two months ago the real negative yield was about 0.50%.

The odds of negative interest rates are 6 standard deviations from the norm.   The odds of such occurring are about 0.001%.  In other words 99.999% of the time interest rates will not be negative.

As widely discussed two months ago there was $17 trillion in negative yielding debt.  Today it is about $12.5 trillion.  Conditions are still extreme.

As noted last week, Belgium and French 10-year bonds now have a positive yield for the first time in a very long time.  Japanese yields are “exploding higher” and are close to becoming positive.

I rhetorically ask how this “explosion” will impact the US Treasury given the perception that monies have no boundaries.

What will happen this week?  The economic calendar is comprised of various inflation indices, retail sales and several manufacturing statistics.

Last night the foreign markets were down.  London was down 1.29%, Paris down 0.03%  and Frankfurt down 0.46%.  China was down 1.83%,  Japan down 0.26%  and Hang Sang down 2.62%.

The Dow should open moderately lower on trade and fears escalating tensions in Hong Kong.  The bond market is closed today for Veterans Day.


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