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Bond Yield Backup



John mentions the quick backup in bond yields in a post below. It's often easier to see a visual representation of this, so I've included two charts below of the 42-day rate of change in 30-year T-Bond yields (42 days is approximately two trading months), showing our current situation and the one in 1987. The current value is indeed the greatest since May 1987.

You will also notice that during the past three years, high rates of change have corresponded amazingly well with peaks in the S&P 500, as bonds and stocks have traveled opposite paths. That relationship has broken down since the equity market low in mid-March, however, so I think it's tenuous to draw the same conclusion now. In 1987, high rates of change in T-Bond yields actually coincided well with equity market low points, as bonds and stocks had a more positive correlation then. There is one notable exception, however, and that is October 1987, as yields backed up in a hurry right before the crash.

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