The stocks and commodities that tend to accompany rising yields haven’t kept pace since early spring. Rates across the curve have accelerated higher, leaving these risk assets in the dust.
But the seasons have changed – and the dust has settled.
Cyclical value sectors have found their footing in recent months. Now, they’re playing catch-up.
One of the strongest market themes in recent weeks has been the reemergence of value over growth.
Check out the overlay chart of the 10-year US Treasury yield $TNX and small-cap value $IWN versus small-cap growth $IWO:
Everyone knows fixed income is having one of its worst years on record. And, from the looks of it, we’ll all be dragging our Christmas trees to the curb before US Treasuries stage a miraculous comeback.
Don’t get me wrong. I believe these safe haven assets will dig in and catch higher – eventually. There’s just no sign of it happening any time soon.
Instead of focusing on the disappointing performance of bonds, let’s turn our attention to its relative trends against other major asset classes – stocks and commodities.
Here’s the commodities versus bonds ratio using the CRB Commodity Index and the 30-year Treasury bond futures:
Wednesday night we held our October Mid-Month Conference Call, which Premium Members can access and rewatch here.
In this post, we’ll do our best to summarize it by highlighting five of the most important charts and/or themes we covered, along with commentary on each
If you can pry your eyes from the UK gilt and Credit Suisse articles, you’ll find it’s not all doom and gloom across the bond market – especially high-yield debt in the US.
A quick warning before we continue: You probably won’t see a similar message on the financial news. It’s just too optimistic for the current environment. It wouldn't get enough clicks.
But facts are facts. And right now, high-yield bonds are hooking higher, while stocks are also rising.
Check out the dual-pane chart of the Fallen Angel High-Yield Bond ETF $ANGL and the S&P 500 $SPX: