The Gold IRA Company

Yahoo Finance: The Bond Market Driving The Show

Article by: Chris Weston, FX Empire in Yahoo Finance

The idea of flatter US and global yield curves is certainly not a new theme. In fact, it is very mature. However, the fact the US 10-year Treasury has traded with a lower yield-to-maturity than that of the shorter-term US 2-year Treasury has fully caught the attention of all market participants. As has the bid in the US 30-year Treasury, which is currently trading below 2% – a new record low, with the hunt for (quality) bonds, with an y positive ‘real’ yield rolling on like a juggernaut.

Gold, as usual, is the net beneficiary of these moves in yield, and the yellow metal has resumed its bull trend. The fact we now have $16t of bonds with a negative yield is driving further flows…it is the best hedge, or offset, against negative-yielding assets we have.

 

Assessing the moves in US trade:

White – US 2-year vs 10-year Treasury CURVE

Yellow – S&P 500 futures

Green – US 30 – year Treasury

 

 

As we can see, bonds seem to be leading equities, and this leads back into my view detailed earlier in the week that bad news is actually bad news for stocks, and we don’t just pile into equities because low bond yields make corporate cashflow more attractive, or results in the equity dividend yield more attractive. Lower yields are a sign that US monetary policy is too tight and the market sees a higher prospect of recession.

To read this article in Yahoo Finance in its entirety, click here.

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Although the information in this commentary has been obtained from sources believed to be reliable, The Gold IRA Company does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. The Gold IRA Company will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.