So the stock market lost about 4.7% today in one day. [How’s that debt deal working for you?]
About 2% of that drop is attributable to the dollar strengthening against the Euro again – as people are getting nervous about Italy. Just wait until it turns cold and Italy has no natural gas from its pipeline from Libya…
But the real story is going on in the Treasury Bond market:
http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/
The 30 year US Treasury bond dropped its yield by 21 basis points…. currently around 3.69% and the entire yield curve is collapsing. The long term yields on bonds rarely moves more than a basis point in a day – these are extremely long term investments. People around the world are in panic mode and dumping their money into US Treasuries.
The alternate explanation could be that the Federal Reserve or other Central Banks are buying up the supply of Treasuries, but I don’t see an obvious reason why they would do that.