Monday, November 9, 2015

All About Bonds

Nothing else matters.  The bond market has stolen the show.  The Fed rate hike in December is getting priced into the markets.  Usually weak crude oil would help support bonds but the weakness is due to a potential Fed rate hike, so investors aren't touching bonds.  And equities don't like a Fed rate hike either.  Usually a big beat on nonfarm payrolls is good for stocks but everyone knows that zero rates is much more helpful to stocks than a marginal increase in jobs.  Plus, I don't think anyone believes the economy is as strong as Friday's NFP states.  Nobody.

When the dust settles, you will have a great buying opportunity in bonds.  This move will last as long as the Fed's resolve to keep raising rates, which means it won't last long.  The Fed is most likely one and done, or if equities squeeze higher next year, two and done, because if they dare try more than that, the stock vigilantes will crush equities and show who's boss.  There is no way this market can keep rising with rising rates.

ES is untouchable here.  Bonds will be volatile till the Fed meeting in December.  That is where the blood is being shed.  Forget equities.

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