Tag Archives: Treasury
August was a good month for stocks. But it was even better for Treasury bonds. A typical long-term T-bond returned a full percentage point more than the Standard & Poor’s 500 index in the month just ended.
Buy what’s down! Stock prices put on a mixed showing this week, as a powerful rally in bank stocks offset weakness in technology and small caps. We expect more of this whiplash action in coming weeks.
Contradictions! Stock prices bounced this week as investors focused on soothing comments from the Federal Reserve and ignored the skyrocketing price of crude oil. We’re not sure how long this type of contradiction can last.
It is what it is! We’re not trying to be cutesy or pretending to be some kind of philosopher. We’re just pointing out that the stock market has a mind of its own.
Yes, I know everybody else on Wall Street is telling you to buy stocks. But there will be plenty of chances, later this year, to buy most stocks at better prices than you can obtain right now.
Approaching a crossroads! Stock prices tried to extend their New Year’s rally into a second week, but the energy suddenly died Wednesday afternoon and the market floundered into Friday’s close.
Blowoff! Stock prices snapped back this week on a combination of New Year’s optimism and hopes that the Federal Reserve’s credit-tightening campaign might end soon. Bullish psychology is clearly in control, and it could keep the rally going until around the middle of this month. As we look at our charts and our history books, though, the action bears a remarkable resemblance to the blowoff that took place in the opening days of 1973.
A week from now, we’ll know a bit more — when the Federal Reserve meets and decides whether, out of respect for the victims of Hurricane Katrina, to take a break from its credit-tightening campaign. At this stage, I’m still expecting Greenspan & Co. to boost money market rates by another quarter-point (to 3.75% on federal funds). But it’s a close call.
The grim pictures of Hurricane Katrina’s devastation are seared into America’s psyche. And now the gas lines! But have you seen what’s going on the bond market? It’s as if a hurricane blew into the Treasury sector, too — and knocked yields flat.
No, it’s nothing like the good old panics the bond market used to treat us to, back in the 1980s and 1990s. But bond prices have taken a pretty good drubbing over the past four weeks. Even with today’s rally, the price of a long Treasury is about 5% off its February peak. Since early 2000, when the stock market bubble popped, every “correction” of 5% (or more) in bonds has ultimately rewarded investors who had the moxie to buy.