Calm Down, Bonds Aren't Going Anywhere

Today I want to talk about bonds. A lot of investors are excited because bonds have experienced a rally in the past couple of weeks. No doubt, it's been a nice, tradable rally, but in the big picture, bonds are not going anywhere. The larger trend is still down. The only thing that counts when talking about bonds is Fed policy or, more succinctly, the fact that the Fed is still in rate hike mode. It may be on hold at the moment, but it's still officially in rate hike mode. That's the only thing that matters. 

When bonds were in their historic bull market of the past eight years (really much, much longer), it was because the Fed was either cutting rates or holding them down at zero. Even so, you had many, many countertrend selloffs during that bull market. Conversely, we saw the benchmark 10-year fall below 2% many times, only to see the yield rally back to, or above, 2% numerous times. Each time, however, it ended up falling back down to new historic lows. ...346 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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