Let’s start putting some of the pieces of this puzzle together, shall we?
The news has been almost uniformly bad the past two weeks, unless you were the one person in your office pool who had Virginia Commonwealth. But stocks have been on a tear. Why, exactly?
We have a few facts from which to start constructing a theory:
- On March 16, the yen spiked, reaching Y76 to the dollar. The next day, finance ministers from the G7 nations held a conference call and agreed to intervene in the forex markets to put a cap on the yen.
- The DJIA and S&P 500 hit their year low on March 16.
- The yield on the U.S. 10-year Treasury note hit a year low of 3.20% on March 16.
Since March 16:
- The yen has appreciated no further, and currently resides around Y82.88.
- The DJIA is up about 6.5%. The S&P is up about 5.8%.
- The 10-year Treasury yield rose as high as 3.49% on Tuesday. Through Tuesday, it had risen every session since March 16, a streak that has not occurred since 1990.
Do not think these various things are unconnected. March 16 was a pivotal day in the global markets.