The proximate cause of Friday's market rally was likely short-covering -- many traders and investors didn't want to go home short in fear of a weekend agreement in Washington, D.C.
There was no agreement over the weekend.
At Friday's close, the S&P 500 stood within 2% of the old high, and the 30-day Treasury bill yield has spiked to 0.21% -- which compares with its recent zero-interest-rate-policy (ZIRP) range of between zero and 6 basis points. This is something of a contradiction in terms and in markets. (I typically favor the predictive value of the fixed-income markets over that of equity markets.)
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