FEAR is back

According to Reuters, today marked

the biggest single day dip in 30-year yields in over three years

The 30-yr treasury bond fell more than 3.5% to yield 4.29% while the 10-yr fell over 4% to yield 3.84%. This means one thing: Fear is back. Throughout the rest of this week, we may see the bond market fear spread to the stock market. Our 200 point drop was only 1.5% off the DOW. We need a 600 point drop to top the fear in the bond market.

Where is this fear coming from? The announcement of more bailouts, liquidity infusions, and relaxing of regulations means that things are worse than they appear. Otherwise, why do anything? The obvious assumption is that the Fed is afraid of something, and if the Fed's afraid, everyone else catches the cold quickly. On top of this comes Chuck Shumer's probe of Fed Home Loan Bank advances to Countrywide. I would be surprised if there isn't any funny business going on there. So would everyone else.

Today's movement in T-Bonds will put the dollar under intense pressure this week. I expect gold and oil to bounce back very strongly. It would not be surprising to see oil hit $100.