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Bonds Now Beating Stocks Year-to-Date
Presented with little comment - except to note the increasingly tight relationship between the price of the long bond and the USD as we see 30Y Treasuries up 4.40% YTD vs ES +3.7% YTD
Charts: Bloomberg
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Bonds...the new smart and sexy.
In a foot race, do you bet on the blind and deaf guy or the one missing a leg? Stocks or bonds?
The only thing bonds are beating is investors. Beating them over the head with negative real rates.
Until you can GUARANTEE return of principal in stocks, I'll gladly take the 2% inflation hit to be sure I'm getting my money back... way better than if equities lose 20%.
(and that inflation rate is a suspect number if commodities continue to get dragged down with equities)
Pssssst. the inflation rate is now all but guarranteed to increase. I mean, the cost of capital for the government and their banking masters is going down after all. Yeah, this will end well as retirees who didn't become bond traders still need to make ends meet as they pay Uncle SAM to loan him money - FAIL.
The world can only have one japan, the world can not become Japan without killing all paper.
Psst. In a global deflationairy purge, you want to be HIGHER up on the capital structure not LOWER. Commodities and stocks dropping in unison over the past 2 months (and over the years since the crisis began) show that they are correlated to drop together, hence, CPI will get pummeled. Going back to the start, this has always been a fight between Ben and the great deflationairy Black Hole. He's thrown 16 trillion at it and he still can't get an edge....
and your point is what, holders of physical assets (especially revenue generating ones) still win either way. Holders of paper still lose. Awesome, fucking bring it.
I'd like to know where you are only seeing a 2% inflation rate. I know everything I'm buying is far more than 2% higher than this time last year.....except for my house which is about 10 % lower in value. But hey I don't need another house.
Official CPI is where 2% shows up.
If you go with the original CPI model, inflation is averaging what, 10 or 12 percent?
Bonds have squeezed every last ounce of capital gain out, leaving investors in a truly zero-return world. This is gonna get fugly when they turn. It's gonna get fugly if they don't turn. There is no reason left to own a bond.
Why would you think so? Bonds have been rallying for 30 years.
Now, at 1.55%, they have made ppl almost 5% just this year, and much more since September.
Next year, when the rate is -1.55%, those investors will have made even more.
Yeah, I've been hearing that a lot over the past few years....
which guy works for JPM?
massive comeback from 11:27 - 11:33
More rumor?
Never mind - found it - S&P had dipped under 1300 - time for correction
I'M LIMPING!!!!!! OUCH IT HURTS!!!!
Tight towing tidbits the smartest gayest person in the blogosphere ever got to recognize.
Beyond words. 2% fixed mortgage by Christmas. Amazing.
Yes, and no one will be credit worthy, LMFAO!!
They know nothing! We need a quick $10 Trillion bazooka now!
Make that $20 Trillion and you can keep the change
Intraday update: $30 Trillion...
I want Lil Timmah on one knee in the House of Representatives by tonight.
It's a tradition by now.
Is that you, Krugman?
On along enough timeline both bonds and stocks will be vaporized....
So, as the 30 year rate approaches zero, does its price approach infinity ?
Help me with the math....
No you silly, the biflationary integral of 0% yield on the 30 year = Prices go higher, incomes lower
So, tell me again... what happens when you divide by zero ? We need to give Bernanke a leg up.
OH SHI-
Don't try that. Please.
Dun dun dun dunn!! Super PPT to the rescue!
"Stocks are well off the lows"
That is just the funny money soldiers coming back from the European front. Like a clock.
SSDD.
pods
There was a recent joke about the zero-coupon bonds in the buffett 10-year S&P bet ...
http://finance.fortune.cnn.com/2012/03/21/warren-buffett-hedge-fund-bet/
S&P 500 vs 5 hedge funds of funds .. hmm..
Do they mean 5 hedge funds, or are they all funds of funds? Because I'm pretty sure paying someone to invest in ETFs is kind of silly.
and LOL the zero coupon is up 45% in 4 years, so they want to sell it and put all the money for charity into Berkshire Hathaway stock.
The OIL traders must be chewing on their toenails about now! ( for lack of fingernails)
I bought some SCO when LSC was trading over $91, so I for one am LOVING IT
Wonder if Obama the Wonder President will update his campaign TV ad that touts stock market levels?
'LOOK stawks are okey-dokey, re-elect ME!' Uh...oh wait...
To paraphrase Milton Friedman, "We're all Beta Chasers now!"
SP to 1160 or below by September.
The year opened at 1257.
And the great wealth drain continues. USD soaring (buys those foreign assets cheaper), bonds soaring (makes deficit financing cheaper), stocks plunging (makes the sheeple scared and willing to obey). Quality.
Yep. Because, above all the other indices, we Amerikkkans have been conditioned to believe that the economy=the stock market.
The campaign ads for Barack Obama merely re-inforce this behaviour.
Don't hate him. He's merely a player. Hate the game.
"we Amerikkkans have been conditioned to believe that the economy=the stock market"
If by conditioning you mean 401k's, then I agree. The only connection most US citizens have to the market is their 401k, which is a reflection of their ability to retire and under what circumstances. The impact of this cannot be understated. The average american will buckle to anything if their 401k gets low enough. And I mean anything. The key to controlling any population is the middle class. Whether they associate upward or downward is critical. 401ks have aligned their interests upward. On purpose, of course.
Yes, and for those retirees with large holdings of treasuries who didn't become bond traders...
LMFAO!! Yeah, this is sustainable. Fuck the paper-pushers, restore the fucking rule of law and prosecute the fucking fraud already. Anyone else really believe that there is no real cost for capital creation without adding anything of real value? FAIL.
Long fascism and war.
Yes. I really feel for the pensioners who are forced into annuties with their already heavily depleted savings. They were saving with the expectation of getting 6 or 7% payouts and are now receiving 2%. This is simply criminal but it has always been that way. I might just join you in that long position...
It is all but guarranteed now as the commodity complex will go into shock, nationalism will consume politics and real supply lines will start failing. When real goods and services stop crossing boarders, troops will. Same as it ever fucking was.
Got any picks?
Haliburton, Raytheon, Lockheed Martin?
Best looking toothless dancing girl in the barn...
Japan has been S&P downgraded 4 times since 2001, yet the JGB 10y yield has dropped 52 bps during that period.
Godzilla-sized debt doesn't matter until one day it does
http://www.bloomberg.com/news/2012-05-15/fujii-warns-sales-tax-bill-failure-would-spark-jgb-sell-off.html
Rainman
eur/jpy is at levels not seen since 2000! Currently @96.799 !
Deflation bitchez
Finally - another sentient being from the world of reality has arrived!
And if elected president I promise every American $100K in cold cash on inauguration day.
You laugh but that would do a heck of a lot better than giving it to banks! At least most of the sheeple who received the $$ would spend almost all of it on discretionary goods and prime the pumps in our economy.
Yeah, we would have inflation but we could deal with that..just increaase the rates and sweep the excess off the table.
I personally would buy more GOLD with 100K!!!
'prime the pumps in our economy'
Uhhh.... the made in China pumps ????
Dishing out $30 Trillion all at once would be catastrophic. I think a better version would be to unleash a 10 percent VAT, have instant tax remittance for this tax, and give everyone $10,000 on their birthday. That way you have flow, without the massive shock.
Banks and the owners of the Federal reserve (a private bank) win again. Retirees, not so much, unless of course they became bond traders.
Yeah, this will end well. LMAFAO!!!
Don't go there very often but I would not count oil out just yet.
HOORAY! The best possible trade for the next decade is around 1%! Gee AWESOME!
That'll be 5% better than the yield on risk assets
Yep! A negative real return is the best investment possible now! Gee its awesome...and all we had to sacrifice to get to THIS point was $200,000 new debt per US taxpayer! Oh HOORAY for our great OverLords!
Ain't that some shit
Ya gotta love the politicians - they lie like no other human being.
Republicans say they are pro business, and they close a portion of the government to promote business, give the moneyto the school system.
Okla. GOP governor, lawmakers raid high-tech fund
Smart elected officials we have - NOT!
Bastards is to good a word for our "elected" officials.
Cheers
The Bond Market will prove to be the greatest destroyer of wealth the world has ever witnessed.
to quote the immortal Dave Hester .... YUUUUP
Looks like they're making sure EVERYONE pays, no matter where investments are.
"It's a giant shit sandwich and we all gotta take a bite."
Does peanut butter have corn kernels?
japanese ADRs may be signaling a reversal in the yen is close. TLT in target zone, may be time to take some profits. If SPY holds the line in the 1295-1300 area odds favor a bounce to the 1340 area or 12800 on the DOW. Gold needs to hold here, a break below the 1530 might trigger stops. defensive stocks little changed so far today may mean another shot to the upside. don't think SPY breaks until stocks like KMB MO PM and others show some weakness. not happening yet. dollar pretty extended after huge rally
Very astute geewhiz...I thought the same thing..SPY is too oversold and we should see an upswing to 1340-1350...but sell when it gets up there because we are in a big time down trend. Well, sell until Bernanke decides to print again. That will be the bottom.
agreed about the downtrend. just doesn't feel like it's ready yet. even financials are mostly higher after getting hit with the kithcen sink . if the news background hasn't been enough to take this thing down so far, it will have to be something else bigger that hasn't hit yet.
We've been buying the Dollar since mid April our thesis is spelled out in, "U.S. Dollar super Rally."
http://blog.commodityandderivativeadv.com/2012/04/12/us-dollar-super-ral...
Many of us did the same captain hindsight. Now what is your "plan" for the the next 5 years?
Paprika-McCormick-2.12 Ozs (60g)-$4.79 GPS TPA. Oh, btw, WTF with JPM?? No headlines. Fuck me running!!!
Bonds???... There are many types of bonds. I don't know why ZH is so anti-muni bonds. Guess what? Meredith Whitney was FULL of SHIT re. her dire predictions for widespread municipal defaults in 2011, and her prediction is not going to come true in 2012. I do not advocate buying munis issued in states like California or Illinois or New Jersey etc. I also do not advocate buying bond funds etc. However, there are munis available from other US states that are reasonably secure. I have never lost $1 in principal from a default on any uninsured munis I ever owned, and I have never missed a single scheduled interest payment while owning munis (dating back to the 1980s) aside from some munis being called before reaching maturity. I also don't pay federal income tax, state income tax, SS or Medicare on income earned from munis. Demand for munis is very strong right now in states like Texas and Florida etc.
Good luck to all.