Silver as an investment

Equity Convexity Is Back “In Play” – A Reminder Of How We Got Here

zerohedge.com / by Tyler Durden / Oct 13, 2016 12:58 PM

Some observations on the deteriorating state of the market from RBC’s Charlie McElligott, Head of US Cross-Asset Desk Strategy

A Reminder on “How We Got Here”

The market continues to “buy into” growing long-term narrative that CBs are shifting from notional “flow” of QE purchases to yield targeting / curve steepening goals and desire for more fiscal policy.

To anybody being intellectually honest, this should be interpreted in the long-term as “a path to tightening.”  Long-end weakens, curves steepen.

You have a Fed pushing rhetoric for another Dec rate hike causing dangerous Dollar strength on “policy divergence” theme reawakening, which triggers “risk off” / “financial tightening.” 

Simultaneously and idiosyncratically, you see the PBoC more willing to allow ‘mkt forces’ to weaken Yuan now that it is included in the IMF’s SDR (more Dollar strength).  New 6 yr lows vs USD.

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