Tuesday, December 28, 2010

Longer term yields rising

According to the Canadian interpretation, the bond market saw a shortage in long term real inventories in the recent past entanglement, it is correcting a forecasting error.
Originally, contango was defined as a fee paid by a stock buyer to the seller in order to postpone the delivery of the stock to a future date.[6] The etymology of the word is not clear, but is assumed to be a corruption or mis-pronunciation of the word "continue
From MarketsWiki.  This should be corrected, the eytomology is from entangle:

tangle Look up tangle at Dictionary.com
mid-14c., nasalized variant of tagilen "to involve in a difficult situation, entangle," from a Scandinavian source (cf. dialectal Swed. taggla "to disorder," O.N. þongull "seaweed"). In reference to material things, from c.1500. The noun is first recorded 1610s, "a tangled condition." 
Contango was likely coined by a Swede. The banker's yield curve is indirectly forcing order in the supply lines. Or, mathematically, it is adjusting the coefficients of the bounded functionals to minimize entanglement.

Digging even deeper, the economy is adjusting the spectral lines on the production spectral curve, these spectral lines need a 15% overlap. In the digital world this is a phase lock system, and is generating the 'rate counters' for supply delivery. The economy wants to keep the Gibbs phenomena separated. (Remember Gibbs, Paul Samuelson's good friend?)
Maximizing the Gibbs separation will minimize traffic congestion, that thing that happens to arrival times when the commuter and the supply truck end up together on a congested street. Or when the five year bond trader and the seven year bond trader target the same customer.

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