On Wednesday a story that first appeared on Bloomberg circulated about China’s alleged plans to “halt or slow” purchases of U.S. debt. 10-year treasury yields jumped to 2.595% their highest levels since March of 2017. The VIX shot up 7.5% and the S&P 500 posted its first negative day of 2017. Even former bond King Bill Gross (now apparently just a bond Prince) said the bond bear market is now "confirmed" amid the Wednesday selloff. As often happens with news of this sort, however, morning came and the move reversed. 10-year note yields fell back to 2.526% closing at 2.531%, the VIX dropped back below 10 and back below the prior day's close and the S&P shot up to another new record high and record close.
This is the failure of news trading. What is real news and what is "pseudo" news (I just couldn't use "fake")? One of the best possible sources for financial news put out a story that contradicted a story they ran in June, according to Morgan Stanley.“When the first story was written in June 2017, 10y Treasuries yielded 2.20% and, apparently, Treasuries were becoming more attractive than other sovereign debt,” Morgan’s Matthew Hornbach writes, in a note dated Thursday, before asking the following: “Now, with 10y Treasury yields at 2.55%, we are supposed to believe that Treasuries have become less attractive relative to other assets?” So Morgan Stanley isn't buying the story, but that doesn't mean it wasn't true. It just means that things change quickly and traders should focus on price action.
Your trading motto should be, "I only care what is happening, I don't care why it's happening." Stay above it all and let Bloomberg, Morgan Stanley, and China call each other "Fake Trading News".