Wednesday, December 14, 2016

Bond Rout To Continue

See Full Report

*As growth and inflation pick up, bonds have downside.

*Bonds are still artificially held up by central banks, making them overpriced versus historic standards.

*Central banks are giving bond investors a window to exit. When central banks sell, look out.

Bonds have more downside. Growth and inflation are picking up while bond yields are still near all-time lows. This is a relationship that likely has only just started to correct.
Bond Yields Versus GDP


Above you see 10 year Treasury yields in red versus the GDP rate in blue. Historically bond yields and GDP move up and down together.
You can see where we circled that the two data series converged to a record historic level.
The jump in GDP surprised bond yields to start moving higher.
Higher GDP means more growth. More growth means you can find better returns outside of bonds so bond yields need to adjust higher.
Based on this one chart it looks like bond yields are too low when compared to GDP in general and especially when the latest move in GDP was upwards.

PRO TRADER: Free Two-week Trial

  • Come see what we're doing.
  • Directional calls on stock market, gold, oil, bonds, currencies, indexes and more.
Disclaimer: All investments have many risks and can lose principal in the short and long term. This article is for information purposes only. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC and their related parties harmless. Any trading strategy can lose money and any investor should understand the risks.





#in, $spy, ^GSPC, INDEXSP:.INX, #elazaradvisorsllc, CME Globex: ES Disclosure: These trades can lose you money and principal especially when using leverage BY USING THIS SITE YOU AGREE TO TAKE ALL RESPONSIBILITY FOR YOUR OUTCOMES AND LOSSES AND HOLD ELAZAR ADVISORS, LLC AND ITS RELATED PARTIES HARMLESS