So it has been 3 weeks since my first post (here) when I defended that the economy would slow down with the end of QE2 and therefore would require extra fiscal and/or monetary stimulus (QE3?) to not collapse (less than 1% growth or double-dip).
The balance, so far, has been:
2yr US Treasuries: 20bps tighter
10yr UY Treasuries: 30bps tighter
US Dollar Index (DXY): -3.65% (US Dollar down, new lows)
US Dollar x Asian Currencies (ADXY): +1.25% (US dollar down, new highs)
June WTI: +3.20% (new highs)
SPX Index: +2.7% (new highs)
Gold: +7.08% (new highs)
Silver: +20.89% (new highs)
US Jobless Claims, 4k avg change: +18.3k
Housing prices (Case-Shiller) down, down, down.
The US Federal Reserve lowered its 2011 GDP growth-band: the highest is now 0.10% lower than the lower-bound of the previous range.
Most economists (GS, JPM, MacroAdvisors, etc) did so before the Fed.
Berna-man delivered a super conservative, neutral and as-expected-dovish speech at the April FOMC meeting Q&A.
ECRI Growth leading indicator: from 2.18% YoY to 0.38% YoY (top in Dec10 @ ~+5.0% YoY).
My reading of all this is that the market has indeed realized we'll witness sub-par growth (US Treasuries yields coming down across the entire curve) and that it is more likely that more accommodation will be required, thus boosting risk-assets and therefore lowering volatility.
Now curious facts:
Portuguese 2yr yields: +293bp (ouch!)
Portuguese 10yr yields: +104bp
Italian 2yr yields: +60bp
Italian 10yr yields: -1bp
Spainish 2yr yields: +18bp
Italian 10yr yields: +5p
Greek 2yr yields: +907bp (ouch!)
Greek 10yr yields: +285bp (ouch!)
And the EURUSD: +3.50%