Posts Tagged ‘treasury bond’

Slow Moving Bond Bear To Quicken

October 16th, 2017 by Kurt L. Smith

The trend is indeed your friend and the only friend one has needed these past few years has been the one in stocks. Despite the fact that municipal bonds were the best performing asset class in 2014 (yeah, that long ago), stocks are where the action is. Enjoy it, because trends change.

When it comes to bonds, only two words are needed: low rates. Forget trend change; forget even a price or yield change. When it comes to bonds, low rates is all you need to know. Spoken by stock market pundits, why would anyone be concerned about bonds? Stocks are where the action is.

Rates are indeed low, but they have been lower. The reason we care is because the trend is your friend and when it comes to bonds, the trend has changed. You know it because I keep telling you. Sure it’s a lonely proposition, but the market continues, albeit v-e-r-y slowly, that I am indeed correct.

In June, I believed a 2.13% low on the ten year treasury completed the bond market’s correction of the 1.32% to 2.64% initial move up. Yep, I tried to hurry the market. In September the market hit 2.02%. But last week we were back to 2.40%. I like my proposition!

At rates of 2-this or 2-that, every stock investor will continue to claim the low rate mantra. But after a 1,000 or 5,000 point decline in the Dow, the perspectives will change. The story will change. (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…)

Rates Rise, Prices Fall

August 12th, 2015 by Kurt L. Smith

Interest rates are moving higher. While markets do not move in a straight line, they do move consistent with the trend. The trend for interest rates is up and the ramifications for investors worldwide will probably be huge. (more…)

Same Old, Same Old

May 23rd, 2015 by Kurt L. Smith

Times, they may be a changin’, but it is difficult to tell by watching the bond market. New issues usually dominate bond market news and that continues to be the case. Corporate bond issuance continues on a tear while municipal bond issuance focuses on refinancings. Interest rates remain low. (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…)

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…)

The Mood of Municipal Bonds

June 2nd, 2014 by Kurt L. Smith

When one thinks of municipal bonds, generally the next thought is…boring. Bonds are usually boring; adding municipal to the mix should make them more so. Bonds have a job to do and for most of the past several decades they have performed. Primarily we have the trend to thank. (more…)

High Prices Be Damned

December 20th, 2013 by Kurt L. Smith

For some things in life, the price is the price. You must pay it because you have to or you need to pay it. With one son in college and another on his way next year, I know all about prices one must pay. Some people look at investing the same way: the cost is the price one must pay. (more…)

Joining The Fray

June 28th, 2013 by Kurt L. Smith

Bond market performance has gone from bad to worse. The month of May was bad; June even worse. Prices of longer-term bond funds have plunged, primarily in the past eight weeks, leaving municipal bond dealers and longer-term municipal bond portfolios down about ten percent for the period. (more…)

On The Right Track

June 10th, 2013 by Kurt L. Smith

In an era of seemingly low to no interest rates, we see an increase in opportunities in municipal bonds. Despite continuing Quantitative Easing by the Federal Reserve, asset prices are weakening, yields are rising and long-term assumptions should be questioned. (more…)

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