Why US bonds could fall despite looming Fed cuts
Dow, S&P 500 off; Nasdaq up slightly
Healthcare leads S&P decliners; cons disc biggest gainer
STOXX 600 down ~0.5%
Dollar, crude, bitcoin down; gold up
U.S. 10-yr Treasury yield down at ~3.74%
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com
WHY US BONDS COULD FALL DESPITE LOOMING FED CUTS
Conventional wisdom suggests that with the Federal Reserve set to cut interest rates this month, U.S. Treasuries are also poised for a big rally, meaning lower yields. But according to Jay Kaeppel, senior research analyst, at research firm SentimenTrader, investors should hold fire before jumping on the bonds bandwagon.
So far this year, the benchmark 10-year yield US10YT=RR has fallen 11.6 basis points.
Kaeppel writes in a research note that there are plenty of reasons not to go with the trend, noting that "the big picture for interest rates is unfavorable." His technical charts project a generally rising rate environment until 2040.
He notes that yields tend to move in "very long-term waves" and identifies a 60-year cycle, with about 30 years of falling rates followed by another 30 years of rising rates. He points out that the latest rates cycle bottomed out in 2010 and currently we are in the midst of a rising rate environment. Within that cycle, however, are minor dips that are expected in a long-term trend.
"This cycle is by no means 'exact'," Kaeppel writes. "Interest rates did not bottom out until 2020, and there is no 'guarantee' that rates will rise until - nor top out in - 2040. Still, if this chart tells us anything, it is that interest rates may be more stubborn to sharp declines than most investors currently think."
Kaeppel also cites his very own JK Bond Cycle Thermometer and Bond Cycle Model, which he says are flashing bearish signs. These models, he adds, are based on long-term cycles in interest rate trends. The good news, he says, is that they have a solid track record in backtesting. But the bad news is that they are not very price-dependent and so if bond prices show a meaningful rising-price trend, these models can sometimes fail to keep track.
That said, Kaeppel points out that both indicators are flashing unfavorable signs for bonds. His models have a win rate of 31% a year later, following previous zero readings. While that does not guarantee that bond prices will fall in the next six to twelve months, they do provide an objective warning sign, he says.
"With the caveat that these models could be proven wrong at any given time, they stand objectively against the current bullish crescendo for the inevitability of higher bond prices," Kaeppel writes.
(Gertrude Chavez-Dreyfuss)
*****
EARLIER ON LIVE MARKETS:
IS THE TIDE TURNING FOR EUROPEAN REAL ESTATE? - CLICK HERE
JOBS, JOBS, JOBS - WITH A SERVICES SECTOR CHASER - CLICK HERE
WALL STREET MIXED AFTER JOBS DATA, AWAITS US NONFARM PAYROLLS - CLICK HERE
S&P 500 E-MINIS NEAR FLAT; TRIM LOSSES AFTER JOBLESS DATA - CLICK HERE
DEUTSCHE BANK TAKES A SHINE TO THE CONSTRUCTION SECTOR - CLICK HERE
BUYBACKS TO THE RESCUE - CLICK HERE
RATE-CUT LOVERS STEADY THE STOXX - CLICK HERE
EUROPEAN STOCK FUTURES EASE - CLICK HERE
MARKETS HIT TENTATIVE PAUSE ON SELLOFF - CLICK HERE
免责声明: XM Group仅提供在线交易平台的执行服务和访问权限，并允许个人查看和/或使用网站或网站所提供的内容，但无意进行任何更改或扩展，也不会更改或扩展其服务和访问权限。所有访问和使用权限，将受下列条款与条例约束：(i) 条款与条例；(ii) 风险提示；以及(iii) 完整免责声明。请注意，网站所提供的所有讯息，仅限一般资讯用途。此外，XM所有在线交易平台的内容并不构成，也不能被用于任何未经授权的金融市场交易邀约和/或邀请。金融市场交易对于您的投资资本含有重大风险。
所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。
本网站上由XM和第三方供应商所提供的所有内容，包括意见、新闻、研究、分析、价格、其他资讯和第三方网站链接，皆保持不变，并作为一般市场评论所提供，而非投资性建议。所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为适用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。请确保您已阅读并完全理解，XM非独立投资研究提示和风险提示相关资讯，更多详情请点击 这里。
