What going on in the FIXED INCOME land ....?

pls examine exhibits 1-3 

1) Zero's latest CDS update....highlights... "continuing the optimism/pessimism divergence between equity and credit/CDS.."

http://zerohedge.blogspot.com/2009/05/latest-dtcc-cds-update-week-of-may-22.html

2) Prieur du Plessis shows an "all clear" picture from the short term fixed income market

http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2009/05/26/credit-crisis-watch.aspx

3) Curve Steepening craze

http://zerohedge.blogspot.com/2009/05/2s10s-curve-just-surpassed-record.html

If you feel your head is spinning, be welcome to the land of unintended consequences. We stresses last weekend (http://reflections-of-reality.blogspot.com/2009/05/dollar-deleveraging.html)

that curve steepening bodes ill in the current environment of a balance sheet recession.  We also mapped out in our 2nd DERIVATIVE THEOREM (http://reflections-of-reality.blogspot.com/2009/05/2-derivative-theorem.html)

 how one could create a virtual Sentiment surge which we now see displayed in EXHIBIT 2.   And don't forget the SMART MONEY the high stake rollers playing the CDS Market setting up the bear play.

Does this explain the picture ? The anser is no , but it tries to find "reflections" like YETI traces in the snow to at least picture the gigantic tug of war that is taking place between the Bulls vs. the Bears, Interventionism vs. Gravity, Smart Money vs. Dump Money......

This war can drag on for some time and lead to 2008 Replay or a SPX 1200 surge (after a short correction) followed by a later day of reckoning.