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Bond Yield

Nov 07 2018

Bond Investors Get It Right Again!

  • Nov 7, 2018

Having devoted all of our professional lives to the monitoring and modeling of equity markets, we’re naturally ticked off that this year’s best stock market signals have in fact been rendered by bonds.

Nov 07 2018

Measuring The Backup In Bond Yields

  • Nov 7, 2018

A couple of months ago, we (belatedly) observed that, in February the 10-year Treasury yield had bro-ken above its 10-year moving average. That simplistic tool has been a pretty good descriptor of yields’ long-term trend for more than a century, with few “whipsaw” signals along the way.

Nov 07 2018

BAA Acting Baaaadly!

  • Nov 7, 2018

Whether or not they’ve risen for the “right” reasons remains up for debate, but the upward move in interest rates has hit the usual suspects very hard in 2018, like early-cycle industries and Emerging Markets.

Oct 05 2018

Stocks Not Yet Yielding To Yields

  • Oct 5, 2018

Regardless of how it’s measured, the liquidity available for global stocks continues to run off.

Sep 28 2018

New Highs In Stocks Have Some Unwanted Company

  • Sep 28, 2018

In recent commentaries, we’ve highlighted the surprising number of U.S. stocks making 52-week lows on both a daily and weekly basis, a sign that the market’s push higher has become more fractured. While pondering the significance of those lows, however, we missed a new 52-week high last Friday in a series we think will be especially critical to the stock market’s near-term fortunes: the 10-year U.S. Treasury bond yield. Specifically, the yield matched its weekly closing high of 3.07% posted on May 18th.

Sep 14 2018

Another Eulogy For The Bond Bull

  • Sep 14, 2018

In the past year, big-name bond gurus have put forth various yield targets that, if exceeded, would provide definitive proof that the secular bull market in Treasury bonds begun in 1981 had finally ended.

Apr 06 2018

Minding The Middle

  • Apr 6, 2018

As equity investors, we’ll readily admit to an excessive focus on the Federal Funds rate and the 10-year U.S. Treasury yield.

Apr 06 2018

A “Drug-Free” Market Decline?

  • Apr 6, 2018

Yields on 10-year Treasuries are up 10 bps since stocks peaked in January, a clear break from the behavior of prior corrections. The last four stock declines of 10%+ were self-medicating—having been accompanied by bond yield declines of 50 to 150 basis points.

Mar 29 2018

Change In Market Character

  • Mar 29, 2018

The Major Trend Index fell into its negative zone last week and we trimmed the already below-average net equity exposure in tactical accounts by a few more points, to a current 41-42%.

Mar 07 2018

1987 Parallels (Part 2)

  • Mar 7, 2018

At the risk of yelling “fire” in a crowded theater, we present a few parallels between recent action and the year leading up to the October 1987 crash.

Feb 07 2018

Will Rates Kill The Low Vol Mania?

  • Feb 7, 2018

While there are many parallels between recent action and that of 1999-2000, stock market leadership is not one of them.

Feb 07 2018

Rates: Does Trend Or Level Matter More?

  • Feb 7, 2018

Our Dow Bond Oscillator (chart) issued what looks like an increasingly prescient SELL signal on January 26th.

Nov 07 2017

… Yet Another Bond BUY Signal?

  • Nov 7, 2017

The implication from VLT Momentum is that bonds are sufficiently oversold (or, equivalently, that yields are sufficiently overbought) to trigger some degree of mean reversion over the next several months.

Nov 07 2017

A Mysterious Bond BUY Signal…

  • Nov 7, 2017

Sometimes we feel compelled to report findings that conflict with our outlook. And then there are the even rarer times we actually do it.

Sep 08 2017

Bonds: No Pain, Yet No Gain

  • Sep 8, 2017

We find it remarkable that the five-year trailing real return on Treasurys has dropped to zero without investors having (yet) suffered any real pain.

Sep 01 2017

Don't "Wage" On A Bond Rally

  • Sep 1, 2017

This morning’s weaker-than-expected reading on wage inflation will no doubt boost applications to the “lower for longer” school of thought on interest rates…

Jul 08 2017

Bonds And Aristocrats

  • Jul 8, 2017

The last year has been a difficult one for any person or theme tied to the “establishment”—including mainstream Republicans, mainstream Democrats, EU commissioners and lobbyists, and, yes, even one of the established leaders of the cyclical bull market—the S&P 500 Dividend Aristocrats.

Jun 29 2017

Where The Bear Lingers

  • Jun 29, 2017

While the next recession could be caused by a variety of factors, we suspect the recovery will eventually end like most post-war expansions, only after a significant rise in interest rates.

Jun 07 2017

Stocks Versus Bonds: A Lonnngggg-Term View

  • Jun 7, 2017

On a 50-year view, stocks do indeed look cheap relative to bonds. But the inclusion of 90 earlier years of data muddies the message.

Dec 07 2016

Rising Rates: Not Always A Death Knell

  • Dec 7, 2016

While the Dow Jones Bond Indicator has stood the test of time, history shows that rising bond yields are not always a bearish stock market phenomenon.

Nov 05 2016

Real Bond Returns: Set To Flatline?

  • Nov 5, 2016

While a plunge into a recession could always result in a final “blow-off” phase to the 35-year secular bull market in bonds, any youthful, long-term buyer of 10-Year Treasurys should weigh that exciting possibility against the odds that bonds do no more than match the inflation rate over the next 30-50 years.

Nov 05 2016

Wanted: A Wrong-Way Economist

  • Nov 5, 2016

The travails of active equity managers have been well-documented throughout the year, but there’s been little attention paid to the 2016 plight of economic forecasters—especially ones unlucky enough to have been accurate.

Jul 08 2016

Who’s Selling Bonds?

  • Jul 8, 2016

Yields on 10-Year U.S. Treasury bonds sunk to an all-time low of 1.37% on July 5th, yet so far there’s been a mysterious absence of contrarians willing to step up to say that “the” secular low in bond yields is at hand.

Jul 08 2016

What Are Banks And Bonds Telling Us?

  • Jul 8, 2016

Last month we noted that European and Japanese banks were among the worst-looking industry indexes among the hundreds we monitor—and both groups obliged by dropping 15-20% in the last month.

Jun 07 2016

What Is The Bond Market Telling Us?

  • Jun 7, 2016

We’re tactically bullish, but among the twelve “Charts That Worry Us” published in the April Green Book, we’ll concede there are a few that still worry us.

Apr 07 2016

Improving Indicator Evidence

  • Apr 7, 2016

Last spring’s “Double Death Cross” in the Dow Transports and Dow Utilities had been partially reversed even before the February low, when the Dow Utilities’ 50-day moving average crossed above its 200-day moving average (thereby issuing a “Golden Cross”). The Dow Transports remain in a bear pattern based on the 50/200-day relationship, but the gap is closing fast.

Apr 07 2016

Strength + Weakness = Weakness?

  • Apr 7, 2016

We like to think our models and indicators help us preserve a high degree of market objectivity. But sometimes we wonder: the latest rally has progressed to the point where we see trouble afoot in both the strongest and weakest charts we can find.

Mar 07 2016

New Bond Market Record: G5 10-Year Average Hit All-Time Low

  • Mar 7, 2016

Despite the improvement in market sentiment, U.S. bond yields were dragged lower by their international counterparts.

Jul 08 2015

A BUY Signal That Says SELL?

  • Jul 8, 2015

Last month we discussed the negative market implications of May’s “Death Cross” signals in the Dow Transports and Dow Utilities.

Jul 08 2015

Navigating The First Rate Hike

  • Jul 8, 2015

Our current view is the lift-off will be December or later. Assuming inflation will pick up and the Fed hikes the rate by the end of 2015, stocks will perform relatively well, with international stocks a better bet than U.S. stocks.

Nov 07 2013

Stock Values: Absolutely, Relatively

  • Nov 7, 2013

The severity of the market’s current overvaluation depends on one’s historical vantage point.

Mar 06 2013

Of Special Interest: Valuing The Stock Market - Do Interest Rates Matter?

  • Mar 6, 2013

Models based on so-called relative valuations have a poor track record in practice, having misled investors at several historic inflection points. Interest rates have virtually no impact on stock market valuations, but they may have transitory effects on stocks in the short term.

Mar 06 2013

Implications Of The End Of Negative Real Yield

  • Mar 6, 2013

The 10-year real yield turned positive at the end of 2012 and has stayed there. We expect higher interest rates, a stronger dollar, and lower gold prices in the next twelve months.

Feb 06 2013

The Math Doesn’t Work For Long-Term Treasuries

  • Feb 6, 2013

The recent upside breakout in the U.S. 10-year yield was successful, and it appears interest rates will remain in the new higher range for now. But what are the short-term implications of higher U.S. Treasury rates on asset allocation decisions?


Jan 07 2013

The Upside Breakout

  • Jan 7, 2013

We still think interest rates are likely to be range-bound, but the range will likely shift higher to the 185-240 bps area if the current breakout is successful.

Dec 06 2012

The State Of Interest Rates

  • Dec 6, 2012

We think interest rates will stay low for an extended period of time, so the key question is, when will rates start rising?


Oct 04 2012

Chasing Income That Barely Exists

  • Oct 4, 2012

Those adopting LDI today are doing so at the least opportune time in more than 60 years.

Sep 07 2012

Not So Calm In The Bond Market

  • Sep 7, 2012

The failed break-out to the upside on the U.S. 10-year yield fits our expectation of a range-bound but higher-volatility environment.


Sep 07 2012

The Reach For Yield… And Its Consequences

  • Sep 7, 2012

Investor infatuation with portfolio income is higher than ever, just as there is less of it available than at any time in history.

Jun 06 2012

How Low Can It Go? Watch The Bund Yields

  • Jun 6, 2012

Going forward, at least in the near term, we think a good guide for the potential downside on U.S. interest rates might be the German bund yields.