Posts Tagged ‘bond bear market’

Lines In The Sand

January 19th, 2017 by Kurt L. Smith

On January 10^th, Big Bill Gross the Bond King, drew his line in the sand referencing the ten year treasury yield at 2.60%. If the ten year yield goes above 2.60% this year, said Big Bill, the bear bull market would be on and its effects on the stock market would be felt.

Now you tell us Bill. After a historic first half of 2016 which gave us the final throes of a mania in Bonds, we experienced a historic sell-off in the second half with yields doubling from July to December in ten year yields. Indeed, the bear market for bonds has not only begun but, depending on maturity horizon, has been in place since 2012.

With the stock market continuing its version of the Bonds final mania, Big Bill probably also knows that nobody cares. Off his throne at PIMCO, Big Bill probably needed to reference stocks in his bond bear market call for relevance sake.

Until the mania in stocks ends, and like the long bull market in bonds, it will end, no one will probably care, or notice, the bond market. Investors in stocks are making money just by owning stocks, not by listening or following experts like Big Bill. (more…)

The Wait Is Over

December 7th, 2016 by Kurt L. Smith

I love it when a plan comes together. The August letter, First Bonds, Now Stocks, could not have been more spot on. The latest rally in Bonds began to reverse in July and it appears the first move towards a Bond Bear Market is now in place. And indeed the excitement the markets reserved for Bonds earlier this year did indeed move to Stocks with a recent exclamation point capping a three thousand point move up in the Dow that began in February.

For those of you reading the press clippings of these latest moves, please remember the narratives are worthless. Trends do not extend forever and long-time readers of this letter know I have been preparing for a change in the long-term trends of Stocks and Bonds for some time.

My excitement that my long wait may finally be over is based on the excitement both the Stock and Bond markets registered in 2016. Soaring prices, plunging and even negative yields, characterized the Bond market all spring long. Prices topped (and yields bottomed) in July with the bellwether thirty year US Treasury bond at 2.08%; by the first of December it was over 3.08%, an almost 50% jump in yield and 19% plunge in price. (more…)

We Live In Interesting Times

September 1st, 2015 by Kurt L. Smith

While waiting for the next move higher in long-term interest rates, the Dow decided to shed 1000+ points. And that was only in the first eight trading days following the publication of the August Letter. (more…)

Municipals, Bonds Without Peers

April 21st, 2015 by Kurt L. Smith

When will the Federal Reserve raise interest rates? This is the question investors want to know. Yet I will tell you, it does not matter. The market tells us interest rates began to rise in 2012; the market will tell us how fast interest rates rise from here. (more…)

Too Big To Sell

March 4th, 2015 by Kurt L. Smith

As a long-time reader you know that I believe the bear market in Bonds began in June 2012. This is a “considerable” length of time ago, to use the parlance of the Federal Reserve, but when you are describing the end of an almost thirty year bull market run for Bonds, well, the longer they are, the harder they fall. (more…)

Buy The Euro; Enjoy Your Trip

February 6th, 2015 by Kurt L. Smith

Hot on the heels of a plunge in oil prices, the Euro has quickly reached a twelve year low. From 140 in May 2014 to 111 last month, like the price plunge in oil from $107 in June 2014 to $44 last month, we have no idea of the economic disruptions that are now under way. (more…)

Considerable Time Over

January 8th, 2015 by Kurt L. Smith

Long-time readers know we have been waiting for expected change in the bond markets for a…considerable time. After all, we are in year three of a bond bear market, yet all we seem to hear from bond market participants are interest rates should remain low for a considerable time…until they no longer do. (more…)

Now It Gets Interesting

November 3rd, 2014 by Kurt L. Smith

The Dow shed 1500 points last month and all of a sudden we can focus on something other than congratulating policymakers on keeping stock prices high and bond yields low. The financial world has been changing in rather dramatic ways but as long as stocks levitated and defied gravity no one seemed to care. (more…)

Big Bill Takes A Walk

October 9th, 2014 by Kurt L. Smith

Bill Gross leaving PIMCO is beyond newsworthy. While one expects to see successful founders, particularly billionaires, decide to hang it up and go do something different, Big Bill didn’t do that. Big Bill dropped a bombshell: he’s moving to Janus.

Big Bill was not a superstar in money management; he is a supernova. Like Peter Lynch of Fidelity’s Magellan mutual fund, Big Bill became a brand, the face of an entire asset class. And because everything is bigger in Bonds, Big Bill brought in big money, as in a trillion dollars or two. Big Bill is considered The Bond King! (more…)

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