The Dow and Nasdaq rebounded today as a result of investors realizing they had overreacted to their precipitous fall the past few days. One contributing factor could be that investors know that the US economy remains strong, with first quarter GDP being revised higher than expected to 1.1% this morning.
The Bank of England injected 3.1 billion pounds of money into the British financial system, easing liquidity fears and calming markets. European markets and the British pound reacted overwhelmingly positively, somewhat erasing the damage over the past two trading days. This optimism carried over into US markets, also contributing to the markets’ recovery from a correction based on external uncertainty.
10 T-Note yields remained flat after their massive drop, as institutions who purchased these bonds in the past few days remain reluctant to return to pursuing a “risk-on” strategy.