Bond Outlook November 14th

We still find it hard to understand what can justify stock markets rebounding on so little positive news. As a very witty, but awfully true UK TV skit pits it, “Markets are driven by sentiment” (www.youtube.com/watch?v=SJ_qK4g6ntM). Unless this is a “Tuesday effect”. On the same day that Goldman Sachs announced it was well protected against sub-prime related exposure, and Wal-Mart announced satisfactory results in its US stores, Bank of America announced a USD 3 billion sub-prime hit, money market funds were being bailed out by Legg Mason and others, and Home Depot reported a big drop on sales.