Doomsayers Beware: Potential Resistance on Bond Prices
As most people know, sentiment has been running uber-bearish. That’s lifted gold and depressed interest rates. But now the action in bond prices may be showing an end to the move.
The iShares 20+ year Treasury Bond ETF tracks the prices of long-dated bonds. And they may have recently hit a peak around $172, near the same level where it was rejected in April.
There could be several implications if this potential double-top holds.
First, and most obviously, it would boost longer-term bond yields. That, in turn, would steepen the curve and could help banks and financials.
It could also lift some economic forecasts using bond yields as indicators.
That, in turn, could make it harder to own high-multiple “growth” stocks and keep money flowing toward cyclical “value” names like small caps, industrials and financials.
Higher rates could also support the U.S. dollar and make precious metals a little less precious.
The news flow today is consistent with this kind of shift:
1-TSA data shows air travel back to its highest levels since March.
2-China is moving to reopen visits to Macau.
3-Washington is inching toward a stimulus bill.
The iShares 20+ year Treasury Bond ETF tracks the prices of long-dated bonds. And they may have recently hit a peak around $172, near the same level where it was rejected in April.
There could be several implications if this potential double-top holds.
First, and most obviously, it would boost longer-term bond yields. That, in turn, would steepen the curve and could help banks and financials.
It could also lift some economic forecasts using bond yields as indicators.
That, in turn, could make it harder to own high-multiple “growth” stocks and keep money flowing toward cyclical “value” names like small caps, industrials and financials.
Higher rates could also support the U.S. dollar and make precious metals a little less precious.
The news flow today is consistent with this kind of shift:
1-TSA data shows air travel back to its highest levels since March.
2-China is moving to reopen visits to Macau.
3-Washington is inching toward a stimulus bill.
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