Calling a Top in Bonds?
Today’s Spotlight Market
October is a month full of horror movies which seem to spawn endless sequels. ?This is the top in Bonds,? has been the call of numerous analysts in the financial media for several years now.? It seems like any slightly negative economic news has been a reason for Bonds to rally over the past few years, and the contract spiked sharply after the release of the non-farm payroll numbers on Friday.
Fundamentals
Ever since the 2008 financial crisis, the US 30-Year Bond futures contract has tended to rally with any significant negative economic news. Whether it is a political debate over raising the debt ceiling in the United States, worries over Greece in the Euro zone, the possibility of a slowdown in the Chinese economy, or US Federal reserve uncertainty, the Bond contract usually rallies. The September non-farm payrolls disappointed many traders, with 142,000 jobs created and the unemployment rate steady at 5.1%. Bonds immediately rallied as the equity market futures sank with the news. The slower than expected rate of job creation will likely cause Fed watchers to heavily discount the possibility of an October rate increase, and may even call a December rate hike into question. Unless there is more positive economic news forthcoming during the upcoming earnings season, the Bond rally may continue.
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