Stocks and Bonds Rain on Powell’s Soft Landing Parade

September lives up to its reputation as being the worst month of the year

Highlights

• Dovish BoE and BoJ announcements have helped calm the nerves in global bond markets after a wild day…

• … but the record net speculative short positions by hedge funds in U.S. Treasuries is looking unsustainable: it was this type of distortion that ultimately triggered the 1987 crash

• The U.S. remains the best house in a dilapidated global neighborhood, which is why the trade-weighted dollar index is breaking out

• Every major economic data release that has come out in the past three weeks has included downward revisions to prior numbers, an important signal of waning momentum