Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Bond Sentiment


Even if bonds drop, stocks could still rally, right?


Long-term bonds had a heck of a run in July and August, with the 30-year bond futures suffering a lower daily close only 12 times during the entire two-month period.

They've backed off a bit this month, but I haven't seen the possibility of higher rates trickle through to many investors just yet.

The chart below shows a composite sentiment score that we compute for long-term bonds. On the chart, I've put red and green arrows highlighting times that I saw truly excessive optimism (red arrows) or pessimism (green arrows).

While surely not perfect, I did generally see bonds back off after highly optimistic readings, and rally after the opposite.

In the waning days of August, the score reached one of the most optimistic (i.e. overbought) readings in the seven-year history that my firm has for it. While rates have ticked up a bit since then, the score has not budged, and remains in "danger" territory.

The score incorporates nothing concerning the fundamental or technical outlook for bonds or the economy – it is purely sentiment-driven. So it's always best to fold something like this into a more comprehensive analysis, but on the surface at least, this one leg of the stool looks pretty wobbly.

< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos