If as I expect, the economy goes into recession on normal metrics, the yield curve will flatten all the way to flat or inverted, the trade to do is a flattener over 2s and 10s or 2s and 5s. The trade in the 2s and 10s shows more mileage but the really interesting trade is

  Markets have been volatile and political and economic news from across the globe have been very confusing. How do we make sense of this?

The US economy is clearly weaker now than it was a year ago. Why then is the Fed’s response to use weaker medicine (Operation Twist) than the previous rounds of QE?

A Crumbling World I think the market agrees that the Fed has no more bullets left. The curve is flat, rates are near zero, mortgage rates are low, and still the economy is weak.

Hedge funds have had a tough time, but not quite as tough as equities or commodities. Bonds have continued to outperform, much to the bewilderment of investors.