A significant #bond #buying opportunity is approaching.
As bond yields surge, history and #techncial analysis suggest that we should look at bonds for both #capital appreciation and a #risk hedge.
realinvestmentadvice.com/surge-in-bond-…
In Dec 2018, we wrote why Jeff Gundlach was likely incorrect about 6% yields.
“Rates are at levels that historically led to some sort of event either economic, financial, or both, When that occurs, rates will go to 1.5% and closer to Zero.“
We got to 0.5%
realinvestmentadvice.com/surge-in-bond-…
The surge in 2-year #bond #yields is unprecedented. Historically, such a surge in short-term yields coincides with either #recessions or #market events. With yields now 4-std deviations above its 52-week moving average, such has denoted peaks previously.
realinvestmentadvice.com/surge-in-bond-…
The current surge in bond yields has taken the 10-year #bond to extreme oversold levels. The 10-year rate is now 4-std dev above its 52-week moving average. It is also approaching the top of the long-term downtrend channel from 1980.
realinvestmentadvice.com/surge-in-bond-…
Notably, people don’t buy #houses or #cars. They buy #payments. Payments are a function of interest rates.
Higher #rates create “demand destruction.” Therefore, as rates increase the deflationary impact will quickly show in commodity prices.
realinvestmentadvice.com/surge-in-bond-…
Also, when the #Fed tapers their balance sheet, money moves into #bonds for the #safety trade. The Fed will announce their #taper schedule in May.
realinvestmentadvice.com/surge-in-bond-…

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More from @LanceRoberts

May 15, 2021
#RealInvestmentReport is out!
Despite the expected #surge in #inflation early in the week, #bulls picked themselves up to rally #stocks into Friday. We discuss the potential for a short-term #bounce, why the #Fed will make a #mistake, and #postioning now.
realinvestmentadvice.com/despite-surgin…
#LessonLearned - don't anticipate the turn in your #technicalsignals. As noted last week, it "seemed" the signal had turned, but it didn't. The #signal is very #oversold, so set up for a short-term #bounce is likely. Caution is still advised for now.
realinvestmentadvice.com/despite-surgin…
If we are #correct in our assessment about the roll-off #effect of #stimulus and #liquidity, we could well see #bonds outperform #stocks in 2022. We are watching very closely as we currently hold minimal duration in our fixed-income #portfolios.
realinvestmentadvice.com/despite-surgin…
Read 5 tweets
May 14, 2021
#MacroView
#NFIB data says we are only in a #recovery, not an #economic expansion.
While the NFIB data doesn't get much #media attention, it should as it tells you much about what is really happening in the #economy.
realinvestmentadvice.com/macroview-nfib…
Reason I pay attention to #NFIB
Sept 2019 - Data rings alarm bells on #recession.
April 2020 - Data says recession arrived.
May 2020 - Data says #economic recovery not as strong as media suggests.
realinvestmentadvice.com/macroview-nfib… Image
If businesses were expecting a massive surge in “#pentup#demand, they would prepare for it. Such includes #planning to increase #capex to meet expected demand. Unfortunately, those expectations peaked in 2018 and are dropping back to the March 2020 lows.
realinvestmentadvice.com/macroview-nfib… Image
Read 7 tweets
Jan 19, 2021
#TechnicallySpeaking - Signs of #exuberance warn of a #correction.
An update of #margin #debt is sending off warning signals that we haven't seen since the last corrective cycle. Also, why this is NOT a #new #bull #market.
realinvestmentadvice.com/technically-sp…
Repeat after me: March was not a #bearmarket.
‘Corrections’ generally occur over short time frames, do not break the prevailing trend in prices, and are quickly resolved by markets reversing to new highs."
realinvestmentadvice.com/technically-sp…
Reason 2 that March was not a #bearmarket
#Exuberance in terms of investors allocation to #equities takes years to recover following a real bear market.
realinvestmentadvice.com/technically-sp…
Read 7 tweets
Jan 18, 2021
The @NFIB #survey doesn't get much #media attention, but it should. Small businesses make up almost 70% of #employment and their #confidence tells us much about the #economy and #smallcap stocks.
realinvestmentadvice.com/nfib-survey-se…
In December, the #NFIB survey declined to 95.9 from a peak of 108.8. Notably, many suggest the drop was “#politically driven” by #conservative owners. While there was indeed a drop following the election, the decline continues what started in 2018.
realinvestmentadvice.com/nfib-survey-se…
Hopes for a #strong #economic recovery may be premature. While #stimulus will give a short-term lift to the economy, once it is spent, growth fades. Businesses won't #invest into artificial supports.
realinvestmentadvice.com/nfib-survey-se…
Read 8 tweets
Dec 14, 2020
Recently, Dr. Shiller suggested that #valuations really aren't that high once you fall in the #Fed trap of using #earnings #yields and #low #rates to justify it. The problem is it is a #rationalization to justify overpaying for #assets.
realinvestmentadvice.com/shiller-ecy-ju…
The main problem in using low-interest rates as a rationalization to overpay for assets is that you have to also discount #future #cashflows for lower inflation and rates as well.
realinvestmentadvice.com/shiller-ecy-ju…
"As low-interest rates went lower, the dynamic changed from using debt productively to using debt for non-productive purposes such as dividend issuance, share buybacks, and, in some cases, offsetting negative cash flows."
realinvestmentadvice.com/shiller-ecy-ju…
Read 6 tweets
Dec 12, 2020
#RealInvestmentReport is out!
The #bullish #bias kept #market holding above recent #breakout levels, but extensions and deviations from means remain extreme. We could see further weakness next week before the year-end "#WindowDressing" #rally.
realinvestmentadvice.com/irrational-exu…
While markets did weaken slightly over the last few sessions, the #market remained above recent breakout levels. However, with a short-term #MACD #sellsignal, and #options #expiration next Friday, we could see further weakness next week.
realinvestmentadvice.com/irrational-exu… Image
In August we laid out our year-end #target of 3750. With the #SantaClaus rally ahead, (in reality it is #WindowDressing week) we are close to our mark. 2021 will likely prove to be disappointing as we lay out the #risks.
realinvestmentadvice.com/irrational-exu… Image
Read 6 tweets

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