Friday, July 8, 2016

Ten-Year U.S. Bond Yield Hits New Low; Dow Adds 250 Points After Strong Jobs Report

This is a contradiction!  The inter market relationship between Treasuries and stocks has been an inverse one since 1997.  Whenever we have seen this anomaly, Treasuries were portending weakness  in stocks.  We saw this in early 2011 on a shorter term basis.  However, this time we are seeing a sustained contradiction which I expect to continue.  Could Treasuries be wrong this time and stocks right?  Anything is possible but the odds speak against it.

HT  +Marc Chandler corrected my statement regarding the inverse correlation between Treasuries and stocks since q997.  He rightl pointed out that, based on 26 week correlations, prior to GFC, the correlation was generally positive.  My point was that since the Asian Currency crisis investors have generally fled into Treasuries in volatile periods.