US Interest Rates Are In "No-Man's Land"

JC Parets
November 4, 2019

Stocks are going up. Interest Rates are not.

This we know.

If you haven't seen our thoughts on stocks lately, I encourage you to catch up here: November - October - September. Today, however, we're more focused on the bond market and what we can learn from it.

First of all, here is the US 10-year Yield. If we're below 2.07 then there is no reason to expect a severe bond sell-off. I guess it depends on what you consider severe, but bigger picture I don't think there is any change in trend until we're above that. And it's not happening tomorrow. 

Click on Chart To Zoom In

To the downside we have the 2016 lows in the 1.30s. This was a similar area to where rates bottomed out in 2012 as well. So we know sellers in bonds have shown up when rates got there. Until that changes, there is little reason to be structurally bullish of bonds.

While we're in between these levels, I think we should expect a bunch of chop moving forward. If you like getting chopped up, this is the market for you! As far as I'm concerned there are better places to be.

Now, there may not be any directional trend right now for rates, but it's the intermarket relationships and spreads between them that we also want to focus on. Remember, there is a lot of information in the bond market to help us make decisions in stocks and commodities. There doesn't have to be a "bond trade" for this market to provide good data.

Here is a breakdown of everything we're seeing in bonds:

Some Quality Time With Bonds (Premium)

 

 

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