End of the Bond Bull? Not so fast....

JC Parets
July 17, 2023

It's hard for me to have a conversation about the stock market without bringing up what's happening in bonds.

Think about it like this, the market cap of all US Stocks is somewhere around $40 Trillion. For the bond market it's over $120 Trillion.

Volatility in bonds tends to trickle down to other asset classes, especially stocks.

US Stocks really got going in the 4th quarter last year, once the US 10-year Note stopped falling in price.

I don't believe that was a coincidence.

But at this point, Large Speculators have on their most aggressive short position in bonds ever.

So in other words, what is historically the "dumb money", particularly at turning points, are betting more aggressively than ever that bond prices are going to fall and rates will now continue higher:

This has me wondering.

What if this is NOT the end of the 40-year bond bull market, like the "dumb money" is currently betting?

What happens if it's the opposite, like it usually is when they act this way?

What if it's bonds that are about to rise off these lows, and it's the interest rates that are about to fall apart?

What then?

How are stocks going to react to increased bond volatility?

Why would interest rates fall apart? What would the bond market be pricing in for stocks, that rates would need to come down so much?

That's what's on my mind and what I'll be paying close attention to this week.

Last week some of our upside targets were hit in equities, and we took profits accordingly.

We also started to initiate some short positions.

We'll discuss them all on tonight's LIVE Mid-Month Conference Call. Premium Members make sure to register here if you haven't already.

See you LIVE @ 6PM ET.

- JC

 

 

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