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Appreciating a Conflicted Treasury Market
Our research into market sentiment is flashing a highly unusual “conflicted” state of risk signal, with a bi-modal probability distribution for hypothetical expected returns on 10-Year Treasury futures over the coming months. This type of probability distribution is typically associated with event risk. That is, there are two competing and conflicting scenarios that are being debated by market participants and both have meaningful chances of occurring. This shows up in our research as a two-humped expected return probability distribution which we call “conflicted”. One of the possible scenarios in the bond ... (full story)
