Second Look At Five Year Treasuries

Let's take another look at the five year Treasury chart I put up a few days ago. I chose the five year because it is somewhat uniquely representative of risk appetite as opposed to other variables driving pricing action in longer and shorter term maturity Treasuries. In other words, the Fed is holding down short term Treasuries and the long bonds are really not purchased by hot money seeking to maximize return. I suppose I could have chosen two year Treasuries but the yield on the five year is more than double that of the two year and therefore likely more appealing to hot money. And because the rapid spike higher from 2% to 3% rates coincided with a top in equities, it is plausible to assume there was a lot of dumping of five years to get back into hot trades in equities and commodities as money managers likely lost their marbles believing the stock market was going to 50,000. Instead that initial spike in the five year in June marked a top in the S&P that lasted more than a month. Now we see another potential top building in the five year as the S&P made a marginally higher high. At least so far.

(This snapshot was taken a few days ago and the five year rate continues to move down.)