I continue to hold long-term Treasury bonds against stock market positions, despite yesterday’s shift in Fed orientation (as they appear to be trying to address the yet-to-be fiscal stimulus of a Trump presidency with an adjustment to their forward view on monetary policy). The 30yr yield is approaching the ‘limiter’ (3.4%) and above that, the doorway to a new long-term trend (4%).
Yet the Long Bond itself is up today after getting hammered yesterday. The bond market has done a good job of leading the Fed to where it needs to go. But we are approaching a trend marker that has limited the yield every time for over 20 years. Will this time be different? It is important to remember that as long as the yield is below 4%, the trend has not changed no matter how much “great rotation” hype we may hear out there. The bond bull is 100% intact right now.
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