From Our Contrary Perch, an Update on Bonds

[edit] Today I took profit (principal & interest) on 7-10 year Treasury fund IEF in order to concentrate on the shorter end of the curve for ‘cash equivalent’ income.

With all due respect to Bill, Ray and Paul the play has been for a contrary move in bonds with our 3 leading experts emblematic of the media’s habit of pointing the investing herds the wrong way at the wrong time. Making myself clear again, I don’t dispute the potential – even likelihood – that a bond bear market began in 2016. But I do dispute every single call out there that it has been technically proven.

Here is the sentiment setup for the 10yr Note again…

10yr treasury bonds

Here is the 20+ year Treasury bond fund in an increasingly good looking short-term bounce pattern.

tlt

Here is the fading gauge of inflation expectations showing the above in ratio to the TIPs fund.

And here are the 10yr & 30yr yields at their limiters (and our targets).

The point is not about who is going to be right and who is wrong. It is not about being the next Richard Russell and making the big (and media-aided) call to be remembered for all time. The point is simply to give people a straight, rational viewpoint on the short-term and long-term.

Speaking as one who cannot predict the future, my viewpoint is that the limiters above have been caution points and that there are macro fundamental inputs in play that could one day define the end of the bull market in bonds. It’s just that that day is not quite here yet.

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