The Return of the Bond Vigilantes

[william the wie]

The shake out just past is a result of wealth management accounts. Such accounts are supposed to be boring. Therefore there are a lot of matched pairs:
Stocks and industrial bonds
CDs and Sovereign bonds

and so on with anywhere from two to almost 20 different sub-accounts with stocks and bonds being the most common type. So when stocks go up there are too many shares and not enough bonds. If possible interest and dividends are used to rebalance stocks v. bonds. Normally there is a 50-50 split and a 5% imbalance will usually trigger selling as happened earlier this month. At current growth rates we should have multiple corrections this coming year. Can these crashes working in our favor?

 

[Mac1958]

I'm watching bonds pretty carefully right now. It'll be tricky - how and when the Fed reacts will determine a lot. When Yellen raised rates, long term yields actually went DOWN because the market recognized there wasn't enough juice in the economy. This time I'm not so sure.
.

 

[Toddsterpatriot]

I'm watching bonds pretty carefully right now. It'll be tricky - how and when the Fed reacts will determine a lot. When Yellen raised rates, long term yields actually went DOWN because the market recognized there wasn't enough juice in the economy. This time I'm not so sure.
.

Between increased borrowings, a hotter economy and smaller rollovers by the Fed, rates are rising.

 

[william the wie]

muni ads that pop up on the freecell site I like to use have gone up 7% in the past month. (247freecell, is the site.) Also an AA muni that has a yield 25% higher than the 10 year treasury is somewhat interesting no matter its maturity