Thus spake agithrustra.
Because so much of my money and my clients' money is in bonds I've been watching the bond market very closely.
Absolute panic stampede riot last few days into buying US treasuries. I was right to dump them - they fell back down in price today. Bond buyers are typically more mild than stock buyers...for them to stampede like that, making treasury prices go parabolic...that's a remarkable amount of panic.
Could be a climax of fear, is what I'm saying.
Today, very notably, high yield bonds are soaring in price - they've been quiet even during the stock rallies we've had.
and treasuries are falling hard.
both suggest comfort with risk that we haven't seen for a while.
maybe this jobs figure will calm the markets, along with a solution to the trade wars.
again, bond buyers are less passionate than stock...for high yield to get this big push is pretty bullish for stocks, I think.
Not convinced until the market starts pricing in Fed rate hikes for 2019. Still holding at zero rate hikes per Fed funds futures which is just dumb. Wages beat expectations which is exactly what set off a huge dump last February. Bond traders are being forced into stampede buy/sell mode to make room and provide money for all the fund re-balancing going, that's my take on it.
Source : I know a bond trader at Vanguard and he told me so
here's the thing. Why in the world is the ultra short fed funds rate higher or about the same as the 3,5,7, year treasury rate? The market has voted with its feet that the economy is slowing and inflation is a non-factor. Sure the market could be wrong. But it doesn't make much sense for an overnight rate to be higher than a 5 year rate decided by the free market.
for the fed to blithely ignore what trillions of dollars is saying and keep raising its rate...that would be major chutzpah. That's why the odds of further rate hikes are so against it happening. The market driven rates are saying the Fed is being too aggressive here.