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“This century hasn’t got the lock on insanity.” – William Peter Blatty, The Exorcist

Below is a snippet of commentary from today’s Morning Lineup.  Start a two-week trial to Bespoke Premium to view the full report.  

We hope you all had a great holiday weekend, and for those who are back to work, it’s going to be a quiet day in the markets as much of Asia, all of Europe, and Canada are closed in observance of Boxing Day.  Futures have a modestly positive bias, and crude oil is trading up close to 2% in the session.

Investors in just about every asset class outside of Energy have had a great end to the year, and the rally in US Treasuries has been among the most impressive. At the long end of the Treasury curve, the iShares 20-Year Treasury ETF (TLT) has rallied over 15% from its lows since late October.  In the twenty-year history of the ETF, there have been only five other periods where the ETF rallied as much or more in 50 trading days.  The three most notable were during the Financial Crisis, in 2011 right around the time of the US debt downgrade by S&P, and then again in March 2020 at the time of COVID. Admittedly, each of those rallies was significantly larger, but what makes the current period notable is that it followed what had been a historically large 15% decline in a 50-trading day span that ended in early October. Never in the ETF’s history has it shifted so fast from one extreme to the other.

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