On Bonds


   Click to enlarge.

   The great bond bull market remains in the historical moment we have called "the apex". The interesting point today is the big area in the middle of the graph. The proliferation of financial giants, the marketing of equities to Baby Boomers, and the force feeding of financial news all coincided with the "Peeps Love Stocks" period. All equity investors received was volatility. A back of the envelope calculation would put the Dow-yes I know its the Dow - 3000 points higher to match the performance of bonds. Zero coupon bonds, the ultimate "certificate of confiscation" in 1984, were a kick ass joy ride. 

We are small futures traders and students of markets. These studies are for entertainment only. The Peeps are wrong in our opinion, as they were when I walked on the floor in 1984. Wrong today, this minute, next week? Who knows? The window at the bottom left is over 2 years long, and yet...

One thought on “On Bonds

  1. pater tenebrarum

    Only – they still hate them. All those inflows into bond funds? Yield chasing, going into junk. Barron’s ‘smart money’ poll had 3% bond bulls this year. Yes, that’s a record bearish consensus.
    That said, over the past few weeks the bullish consensus has increased notably, in terms of the shorter term indicators (market vane, rydex flows, etc.). Not to the point where one would call it extreme, but mid to high end of the range. So a correction will probably happen soon and it could be a sharp one.
    Other than that, this looks like the next ‘widowmaker’ – that’s what all those people trying to short the JGB’s over the years…no, rephrase – over the decades – have learned to call the JGB.


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