Bonds and stocks may be getting back to their usual relationship, a plus for investors with a traditional mix of assets in their portfolios amid fears that the U.S. faces a recession this year.
That classic portfolio, consisting of 60% stocks and 40% bonds, was hammered in 2022. It’s unusual for both stocks and bonds to tank so precipitously, but they did last year as the Federal Reserve rapidly raised interest rates in an effort to tame surging inflation in the U.S. Stock prices fell sharply that day amid fears of a slowing economy, but Treasury bonds rallied as investors sought safe-haven assets.
The iShares 20+ Year Treasury Bond ETF TLT has climbed 6.7% this year through Friday, compared with a gain of 3.5% for the S&P 500 SPX , according to FactSet data. The iShares 10-20 Year Treasury Bond ETF TLH rose 5.7% over the same period. The bond market has signaled concerns for months about a potential economic contraction, with the inversion of the U.S. Treasury market’s yield curve. That’s when short-term rates are above longer-term yields, which historically has been viewed as a warning sign that the U.S. may be heading for a recession.
As for longer-term rates, the yield on the 10-year Treasury note TMUBMUSD10Y ended Friday at 3.483%, also falling for three straight weeks, according to Dow Jones Market data. Bond yields and prices move in opposite directions. “An investor can rightly question the bond market’s recession-tilting call, but knowing it’s out there is better than being unaware of this important signal,” said Colas.
US10YR (Treasuries) : Live example on T.F. 15m, demark 9, supertrend, LRegr.Forec., Interc., Slope, RSquar., Supp and Resist. Lorenz attractor area, Pivot and Target price, and new Open Interest Long (AreaGreen) Short (AreaRed).
For the love of God, will the illuminati WEF and fed, rip off the band-aid and admit there IS going to be a recession? So we can move on with the destruction of civilization?