In the same category

Question of the Day: Is the Bond Bull Market Over?

IMG Auteur
Published : January 11th, 2019
464 words - Reading time : 1 - 1 minutes
( 1 vote, 4/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...
Category : Invest

Amidst talk of red lines, trends lines, and common sense lines, the debate lingers: Is the bond bull market over or not?

Bull and Bear Markets

I asked Bianco for the above long-term chart. Thanks Jim!

The notes in blue and the arrows are mine. The arrows may seem obvious, now that I drew them, but they would likely have seem obvious had I drawn them differently.

Secular Bull and Bear Treasury Markets

What's the Definition?

There is no generally agreed upon definition of a Treasury bear market.

Those who suggest a a 35-year bull market is long in the tooth, just might wish to ponder the 100-year secular bull market shown above.

In equities, a 20% decline constitutes a bear market. With Treasuries, 20% moves are ordinary. In the above chart I defined a bear market in bonds as a 100% rise in yield and a bull market as a 50% decline in yield.

With that definition we had a 100-year secular bond bull market from about 1838 to 1938 (a bit longer actually).

Like My Definition?

Hopefully, that chart makes a lot of sense at first and even second glance, but please consider zero bound effects.

Zero Bound Effects Since 2012

Since 2012, the yield on the 10-year Treasury note has doubled or halved three times. That is what happens as yields approach zero.

Japan provides a stunning example.

Zero Bound Absurdities

Bear Market Definition Refinement

To accommodate zero bound impacts, we need a ceiling breakout.

  • For the US, I propose a bear market is a 100% rise in yield provided the yield tops 4%.
  • For Japan, I propose a bear market is a 100% rise in yield provided the yield tops 2%.

Question of the Day

Is the bond bull over?

You tell me, but first provide a definition that makes sense mathematically, and chart-wise.

People have made fools of themselves countless times regarding both the US and Japan.

For 20 years, the long-term yield in Japan was below 2%.

My take?

I do not know if the bond bull is over, nor does anyone else.

My strong belief is the US will enter a recession and yields will tumble. I've been known to be wrong (and right) before.

Powell Promises Patience

Fed Chairman Jerome Powell promises patience: I say So What? It Doesn't Matter

Similarly, economist David Rosenberg says Recession Odds North of 80%.

Given the US has $22 trillion in debt and deficits as far as the eye can see, I have doubts about whether or not the low in yields is in. Yet, we could have a 100-year bull market. It's happened before.

People pretend they know things are are truly unknowable.

Source : moneymaven.io
<< Previous article
Rate : Average note :4 (1 vote)
>> Next article
IMG Auteur
Mish 13 abonnés
Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. He writes a global economics blog which has commentary 5-7 times a week. He also writes for the Daily Reckoning, Whiskey & Gunpowder, and has over 80 magazine and book cover credits. Visit http://www.sitkapacific.com
WebsiteSubscribe to his services
Comment this article
>Follow all commentairies
You must be logged in to comment an article8000 characters max.
Log in or Sign up
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
Ecological Armageddon: “We Are Destroying Our Life Support Systems!”
19 Jankevthorne
In further support of the article's conclusions, I recommend this treatise written by Jeremy Grantham, a chief investment strategist: "The original...
Beware the "ZeroHedge Trap"
16 Janjohngaltfla@yahoo.com
Nicely done and very well written. The doom is coming but this asteroid misses Planet Earth in Q1. However, I think we are in for a substantially r...
Turbulence and Brexit Make Safer Options Like Gold and Cash Essential
15 Janallstarchuck
If investors included safe-haven assets in their portfolios possibly mistaking them for a hedge, they would potentially inflate their prices in nor...
Top Ten Trends Lead to Gold
14 JanAriana33
This is a good article, and I can agree with many points. I've been investing in gold, particularly the American Gold Eagles for quite some years n...
The Black Swan So Ugly No One Will Talk About It
14 JanS W.
A black swan is a highly improbable event. Obviously the author of the article does not understand that.
Fed’s Balance Sheet Reduction Reaches $402 Billion
07 JanRocco
Every time the FED speaks, gold skyrockets. Just buying some gold every time before the FED makes an announcement and then selling for a quick prof...
Gold Price 2019: 5 Analyst Outlooks
09 JanS W.
In reality there is no such thing as a price of gold. That is because those that are swapping their gold for worthless pieces of paper ( transa...
Will Coins and Bars Save Gold?
30 Decstevewonders
The only thing that will save gold in 2019 is the dollar/yen. I am out of all speculative positions going into the long holiday weekend. I will loo...
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS