Strange things are afoot at the Circle K

Those of you who remember the movie "Bill & Ted's Excellent Adventure" know where I'm getting that headline from. In a financial context, though, I'm referring to the moves I'm seeing in several areas of the currency and bond market this morning. Most notably, the Dollar Index is breaking out to the upside (+89 ticks to 87.55) and the 2-year swap spread is blowing out (+15 basis points to about 73 bps as I write). These are "yellow alert" signals that suggest something is awry in the credit markets again. Take notice.

I should also note that the cost of 10-year CDS on U.S. government debt continues to increase, touching a record-high 88 bps on Friday. This recent post explains the potential causes and effects of this development. Finally, gold continues to rise -- with the yellow metal up about $28 an ounce in the spot market last I checked.