Bond Market & Interest Rates Part Two
Tuesday looked like a short covering rally to balance out last Thursdays thumping. But more importantly the bond market got beat like a drum, again.
We have been banging this drum for awhile in these pages, the soft patch will be temporary, "the 3rd quarter economic numbers will recognize a strong undercurrent that is already underway."
At one point we considered a summer pause, but now it is certain the Fed is NOT going to pause and will remain MEASURED until Q3 when the numbers will support a rise greater than 25 basis points.
Thats when the kit gloves come off on the existing bond market party. Read the late MAY post highlighted above, CAREFULLY. The timing of certain events is critical.
The dollar bear shorts continue to unwind, and the dollar continues to rally. Why? We are the only game in town, and if we catch a cold, everyone catches the ASIAN flu, including the Chinese.
Bottom line, RATES WILL CONTINUE TO RISE, beyond anyones expectations. And the dollar will continue to retrace its 3 year debacle. Recent evidence supporting our long held contentions follow.
The Commerce Dept. reported a third consecutive monthly increase in factory orders (due largely to a surge in aircraft orders), as May orders rose 2.9%. the largest orders increase in 14 months provided some reassurance that June orders could also be strong and that the second half of 2005 may be even better than the first...
Wal Mart raised its forecast for June comps to 4.5% (from 2-4%). Wal-Mart's report, coupled with Walgreen's strong same-store sales gain of 7.8% for June, provided further evidence that, even in the face of higher gasoline prices, consumer spending remains on track to support real GDP growth of 3.0% or better...
The 10 year note closed down 17 ticks to yield 4.10%, as strong factory orders reinforced the economy's ability to endure rising interest rates and oil prices...
Reports out of Prudential that recommended investors with the appropriate risk tolerance get out of bonds altogether - allocating 100% of their portfolio to equities versus a benchmark 60/40 stock-bond split...
It is very unusual that a large house would recommend ZERO exposure to bonds, what are they trying to tell us?
Be aware, that a hot flood of foreign money may raise stocks and bonds (after a severe beating down) in the 2nd half of this year. Rising rates may also chase speculators out of real estate and back into the equities market. Thoughts and ideas to ponder.
We have been banging this drum for awhile in these pages, the soft patch will be temporary, "the 3rd quarter economic numbers will recognize a strong undercurrent that is already underway."
At one point we considered a summer pause, but now it is certain the Fed is NOT going to pause and will remain MEASURED until Q3 when the numbers will support a rise greater than 25 basis points.
Thats when the kit gloves come off on the existing bond market party. Read the late MAY post highlighted above, CAREFULLY. The timing of certain events is critical.
The dollar bear shorts continue to unwind, and the dollar continues to rally. Why? We are the only game in town, and if we catch a cold, everyone catches the ASIAN flu, including the Chinese.
Bottom line, RATES WILL CONTINUE TO RISE, beyond anyones expectations. And the dollar will continue to retrace its 3 year debacle. Recent evidence supporting our long held contentions follow.
The Commerce Dept. reported a third consecutive monthly increase in factory orders (due largely to a surge in aircraft orders), as May orders rose 2.9%. the largest orders increase in 14 months provided some reassurance that June orders could also be strong and that the second half of 2005 may be even better than the first...
Wal Mart raised its forecast for June comps to 4.5% (from 2-4%). Wal-Mart's report, coupled with Walgreen's strong same-store sales gain of 7.8% for June, provided further evidence that, even in the face of higher gasoline prices, consumer spending remains on track to support real GDP growth of 3.0% or better...
The 10 year note closed down 17 ticks to yield 4.10%, as strong factory orders reinforced the economy's ability to endure rising interest rates and oil prices...
Reports out of Prudential that recommended investors with the appropriate risk tolerance get out of bonds altogether - allocating 100% of their portfolio to equities versus a benchmark 60/40 stock-bond split...
It is very unusual that a large house would recommend ZERO exposure to bonds, what are they trying to tell us?
Be aware, that a hot flood of foreign money may raise stocks and bonds (after a severe beating down) in the 2nd half of this year. Rising rates may also chase speculators out of real estate and back into the equities market. Thoughts and ideas to ponder.
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