Is the bond bear market finally over? That is the question everyone is asking now that bond prices rallied sharply following the November FOMC policy meeting. As noted earlier:
“Given that the Fed did little to talk up the projections of further rate hikes, the market took this as meaning the Fed is likely done hiking rates. Of course, that means, from the market’s perspective, the subsequent actions will be ‘rate cuts.'”tone of the Fed’s commentary, combined with a much weaker-than-expected employment report last Friday, expectations for higher yields collapsed, sending bond prices higher.that will be looking for an exit to sell holdings at higher prices.
Secondly, once we step away from the daily volatility caused by hedgers and traders, a longer-term view also supports a potential reversal in bond prices. Historically, when interest rates traded atSuch was due to a financial event, economic strain, or other outcome caused by higher interest rates on a leveraged economy. Currently, rates areBut, if we push our analysis out further, using MONTHLY data, we see the same extreme deviations from the norm.