Skip to main content
Tags: Kahn | bull | market | bond

Barron's Kahn: Bull Market for Bonds Isn't Over

By    |   Thursday, 12 February 2015 12:13 PM EST

Bond prices have cratered since the 30-year Treasury yield hit a record low of 2.22 percent Jan. 30 — it now stands at 2.57 percent.

So does that mean the bond rally is over?

"The short answer is no," writes Barron's columnist Michael Kahn. "No matter how strong, every bull market has corrections. And so far, the decline in the Treasury market looks to be just that — a short-term dip in a long-term rising trend."

On the fundamental side, the market seems to be taking in stride the expectation of a Federal Reserve interest rate hike this year, Kahn says. Economists' consensus is that the Fed will move around mid-year.

Meanwhile, "inflation is virtually absent, and oil prices, while firming, are still at multiyear lows," he notes.

"All of these are reasons to believe bonds are not about to roll over and die."

On the technical side, while the Select Sector SPDR-Utilities ETF has slid more than 7 percent below its recent peak, "we can see several support features in place that may ultimately provide good buying opportunities," Kahn writes.

Utility stocks often act as a proxy for bonds.

"The bottom line is that the bond market, confirmed with interest rate sensitive areas of the stock market, is in a correction and not likely in a bear market," he notes.

"There are many reasons to expect that buyers will become active again at lower prices and dividend yields, especially in utilities, real estate investment trusts, and perhaps other sectors will be too attractive to ignore."

David Rosenberg, chief economist at Gluskin Sheff + Associates, isn't so bullish, saying global bonds and the U.S. dollar appear overvalued.

"Make no mistake: bonds are already priced for the world to come to an end, and the world is not coming to an end," he said, according to the Financial Post.

"And looking at the massive net speculative dollar long positions on the InterContinental Exchange, the bull view on the greenback is arguably the most crowded trade there is across the planet."

© 2024 Newsmax Finance. All rights reserved.


Finance
Bond prices have cratered since the 30-year Treasury yield hit a record low of 2.22 percent Jan. 30 — it now stands at 2.57 percent.
Kahn, bull, market, bond
339
2015-13-12
Thursday, 12 February 2015 12:13 PM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
TOP

Interest-Based Advertising | Do not sell or share my personal information

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved
Download the NewsmaxTV App
Get the NewsmaxTV App for iOS Get the NewsmaxTV App for Android Scan QR code to get the NewsmaxTV App
NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved