The bond market is discounting the idea the Fed is going to continue raising rates. The first opportunity you have to see whether they’re right or wrong is next Friday, when Powell gives a major speech on the economy.
I think the market is going to be higher. This is December. It’s month-end. It’s quarter-end. It’s year-end. You just had the equity market get crushed. Spread bond markets have not done that well, but generally bond markets have outperformed stock markets. You’re going to have a large amount of rebalancing. I think that could stabilize things between now and Monday.
This is a rounding error. If the Chinese were going to show their displeasure because of the tariffs, this is not where they would do it. Would the Chinese rather own 2-year Treasurys at 2.80 percent yield or 2-year German bonds at minus 0.53? China's not going to show its displeasure in this venue.