Bonds

Weekly Update

Market Rotation Points to More Strength

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Published August 14, 2020

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This year has certainly already been one for the ages in many ways, including in the stock market. Stock prices have experienced both one of their steepest drops in history as well as one of their most impressive rallies. Bonds have delivered stock-like returns so far, while some commodities have soared – looking at you gold and silver! The market has rewarded both defense (bonds, gold) and offense (high growth tech/consumer stocks). The latest twist in the market has been a notable rotation into cyclical sectors, many of which have been lagging for quite some time. (more…)

Uncategorized, Weekly Update

All Hail the Central Banks!

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Published February 7, 2020

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We were reminded again this week of the psychological power of central banks over today’s market participants. An announcement early in the week of new money(!) pushed into Chinese markets by the Chinese central bank (PBOC) made stock investors forget all about the potential global economic hurdle that is the coronavirus (with investor enthusiasm aided by a reduction in the spread of the virus). (more…)

Uncategorized, Weekly Update

Stocks and bonds both pushing higher

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Published July 19, 2019

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Below is a survey of markets through a series of charts with the idea being a quick scan to highlight the recent new highs, and how close other market indexes are to joining in those highs.  The run higher in stocks has been largely propelled by optimism over a new round of Federal Reserve interest rate cuts, with investors preferring to take an optimistic view that the cuts in rates will avert a possible recession.

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Uncategorized, Weekly Update

The IPO Frenzy to Come

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Published February 15, 2019

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Investors often forget that markets are finite in their resources available, and investors must choose where to place their money. Sometimes the money flows into stocks, sometimes into bonds, etc. It’s simple supply and demand. We noted recently how much money was flowing INTO bonds despite a strong stock market rebound. (more…)

Uncategorized, Weekly Update

Explanations for the Market Drop

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Published October 19, 2018

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Our post last week noted that the October selloff in stocks likely had drivers other than the oft-noted rise in interest rates as some of the most interest rate-sensitive sectors, such as utilities, were holding up just fine. We also noted that the wave of geopolitical issues that seem to be ever-widening were unlikely to be a major cause of the selloff as investors were not pouring money into bonds, as they typically do during periods of angst. A recent note from Oppenheimer points to persistent and increasing weakness in non-U.S. economies as being the primary catalyst for the current stock market correction. (more…)

Uncategorized, Weekly Update

Higher Interest Rates Won’t Kill the Stock Market

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Published March 2, 2018

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This week we share some good information from a webcast given by Charlie Bilello of Pension Partners. The first chart shows the downward trend of the 10-year U.S. Treasury yield. Note the green arrows as the yield hits the upper portion of the channel. We are sitting right at the top of the channel. Do we want to see yields break through to the upside? (more…)

Weekly Update

When Yield Spreads Get Crazy

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Published August 11, 2017

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Yield spreads provide a view into the risk appetite of market participants. If the spread between low risk and high risk bonds is large, investors are concerned and want to receive more compensation for taking on the added risk. As investors become more comfortable with the market and begin to view it as increasingly benign, they require less compensation. In times of extreme market complacency, the relationships between risk and return appear to almost break down. And so it is with European high yield (aka “junk”) bonds today. (more…)