Friday, November 30, 2007
Bond Timers are Bullish
Here is a weekly chart of the yield on the 10 year treasury note. Remember that yields move inversely with bond prices, so when the yield is low the price is high and vice-versa.
Mark Hulbert today observed that the bond market timers he follows are as bullish today as they were back at the yield lows in 2006 around the 4.40% level. In other words, at that time in 2006 bond timers expected yields to drop still further and prices to rise, but exactly the opposite happened.
I think we are about to see history repeat itself here. Bond timers are very bullish but I think the 10 year yield is about to rally back near the 5.00% level. The economy is going to get stronger and stocks will rally as will the US dollar.