G&S Perspective: Bond values were getting more volatile in mid-August as traders struggled to identify the state of the domestic and global economic recovery. A stronger and quicker recovery enhanced by liquidity from central banks could spike inflation concerns. 10-year yields (symbol: TNX) are back above 0.7% and the 30-year (symbol: TYX) yield is above 1.4%. One could argue the negative trend in yields has bottomed and a counter trend rally higher is underway. Both are well off the March lows when 10-year yields were at 0.39% and the 30-year yield was 0.85%. This trend reversal could be short lived as the recent rise in yields has been met by a new wave of Treasury buying. TYX has resistance just above 1.5% as well as the bearish trend line. Time will tell if this is another short lived pop or if this rally has more upside.
“The market can move for irrational reasons, and you have to be prepared for that.”
― Bill Gross,