Wednesday, July 21, 2010

Bonds don't lie

An excerpt from this mornings - pre-Fed - Quick Takes Pro newsletter.

In the Treasury market, yields on the 10- and 30-year bonds fell back below their big round number levels of 3% and 4%, respectively. And in the 2-year, the yield spent most of the past week below 0.60%. That is lower than it was when I wrote about it as a harbinger of bearish economic trends in Barron's last month.

The bond market does not give its blessing to the recovery or to a rally in stocks.

Who do you believe? The bond market or BlackRock (notoriously bullish investment managers)?

8 comments:

Amalan said...

Agreed. So, how do you explain the steep (and positive) yield curve (which is also based on the same bonds)?

Quick Takes Pro said...

yield curves are for economists
(said only partly in jest)

The absolute levels across the board are coming down.

steven said...

The steep slope of the yield curve can be explained by insatiable foreign demand for dollars.

William said...

In regards to your Barron's article, I've been noticing that behavior as well. I think AAPL is another great example. People were buying all day ahead of the release and bid the stock up to 266 in the after hours session. Today the stock left all the Johnny come latelys under water.

bmbull said...

The steep slope of the yield curve can also be explained by short-term rates at or near zero.

MrWave4 said...

I agree with the comments made in your article "The bear leaves its paw print". However I think we have moved away from the abyss you only have to look at the TED spread.

MrWave4 said...

I agree with the comments made in your article "The bear leaves its paw print". However I think we have moved away from the abyss you only have to look at the TED spread.

Quick Takes Pro said...

I have been watching LIBOR and Bills separately and they do act counter to Armageddon. So does copper.

Still, the market is burping and gagging just like it would before it pukes (I used to work on a trading desk).