### POV: US STOCKS AND BONDS.........>

US TSYS/STOCKS: ### POV: US STOCKS AND BONDS FOLLOWING DIFFERENT PATHS 

- The US stock market has been thinking about the tax bill and its various

permutations and implications for so long, that by Tuesday, it largely priced in

presumed corporate earnings/stocks gains from a lower 21% corporate US tax rate.

(The US House votes on tax bill at 1:30pm ET-2pm ET start, with Senate afterward

today.) 

- But US Treasuries are not benefiting -- unusually -- from stocks weakness.

Treasuries departed from recent trend, and are not locked in their usual

stocks-vs-bonds tight correlation. The Treasuries are more influenced by central

banks/Quantitative Easing/taper considerations, and plain old supply

considerations. The US Fed has started to reduce its balance sheet holdings of

$4.2B in MBS and in Tsys, and will only continue to taper those holdings. 

- Meanwhile banks don't have much balance sheet left to take on new trades into

the quarter-end/year-end, Dec. 29th. So Treasuries could be choppy near-term.

German Bunds are sliding on  prospects of more 2018 German govt debt issuance,

specifically in long end, and finally, on  prospects of eventual ECB tapering.