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The five-year T-note (^FVX) is under 3% today. Six months ago, it was going for 5%. Notice how you never hear the media talk about "irrational exuberance" or "runaway bubbles" in the bond market. Bond traders are always assumed to be right.

This is obviously theoretical, but if I ran a bank, I'd rather short the five-year note than borrow at the Fed Funds rate.

Posted by edelfenbein at January 17, 2008 2:08 PM