Today’s action was most peculiar for a 7% upside day. Not in the stock market so much, but in the bond market. Treasuries retreated less than 1%, LIBOR was flat, LIBOR/OIS tightened marginally, and BBB CMBS spreads tightened marginally. Much like we saw during the first 20% of this rally it would appear as though the bond market is not confirming the exuberance that we’re seeing in the stock market. The fundamentals are certainly not as positive as many might have you believe. The credit market remains extraordinarily distressed considering the phenomenal amount of the government intervention.
Of course, the stock market can stay irrational longer than you can stay solvent so be careful out there. Especially when the government continues to change the rules of the game day in and day out….