“A growing economy with related worries about increases in future inflation would typically produce rising yields on longer-term notes and bonds, not declining yields. A dramatic flattening in the yield curve is seen as a red flag for an economic slowdown, sagging inflation and as a potential precursor to the onset of recession. None of that would be consistent with the Federal Reserve continuing to tighten interest rates – which it is expected to do again in December.”

Pam and Russ Martens, Does Jay Powell Hear the Alarm Bells From a Flattening of the Yield Curve<

“The ambition of Caesar and of Napoleon pales before that which could not rest until it had seized the minds of men and controlled even their unborn thoughts.” 

Robert W. Chambers, The King In Yellow: Repairer of Reputations

We *almost* had a correction in the US equity markets today. Imagine that!

However, crisis was averted as determined buying of the SP 500 futures stepped in this afternoon after the European traders went home to their schatzies.

There was a definite whiff of concern in the air this morning, as indicated by the VIX which sparked up quite sharply, and then fell down again as the calming liquidity flowed over the financial asset markets.

The flattening yield curve in Treasuries is setting off alarm bells, and well it might. But what do the exceptional have to worry about, as long as they are winning.

Gold had a bit of a rally today, following on gains, as silver slumped a bit.It was the beginning of a ‘flight to safety’ that got squelched.

We’ll know when a real flight to safety catches hold, because the continued efforts of the Street to pump up stock prices is going to leave a lot of empty support levels underneath.

Hence, as I have said, in attempting to prevent a 3% correction they are going to set up somthing stiffer, in the neighborhood of 10%.

And it is not because they are stupid, or foolish.They just don’t give a damn.

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