Best of the Week
Most Popular
1.Election Forecast 2015 - Opinion Polls Trending Towards Conservative Outright Win - Nadeem_Walayat
2.UK Solar Eclipse - End Time Sign, Judgement Day, Doomsday! - Nadeem_Walayat
3.Gold And Silver - When Will Precious Metals Rally? Not In 2015 - Michael_Noonan
4.Preparing for the Next Stocks Bear Market - Forecast 2015-2016 - Gary_Savage
5.Is a Stock Market Crash Imminent? - David Eifrig
6.Gold Price Slumps as US Dollar Soars, What's Next? - Nadeem_Walayat
7.US Dollar Forex Pairs and Gold Chartology - Rambus_Chartology
8.Election Forecast 2015: The Day Labour Lost the General Election - Nadeem_Walayat
9.The ECB Should End QE Next Month - EconMatters
10.Silver Price Poised to Surge - Zeal_LLC
Last 5 days
Don’t Celebrate the U.S. Housing Market Recovery Yet - 30th Mar 15
A Middle East Nuclear Holocaust - 30th Mar 15
Peak Gold? – Goldman Sachs Research Warns of Peak Gold Production - 30th Mar 15
With Yemen Burning, Arab Spring II Is Underway - 30th Mar 15
No FED Bets From the BIS - 30th Mar 15
Election Forecast 2015 - Debates Boost Labour Into Opinion Polls Seats Lead - 30th Mar 15
Economic Recovery, Geopolitics and Detergents - 30th Mar 15
U.S. Dollar, Commodities and the Gold Miners GDXJ ETF Analysis - 30th Mar 15
Stock Market Short-term Downtrend - 30th Mar 15
David Cameron Election 2015 Debate Facts Check - Employment, Immigration, Debt & Deficit - 29th Mar 15
Stock Market About Ready to Crash! - 29th Mar 15
Reflections in a Golden Eye - Gold Market Rejection, Repatriation and Redemption - 28th Mar 15
Stock Market Inflection Point - 28th Mar 15
Gold And Silver - What Moved Price? Bab el-Mandeb And Uranus Square Pluto. What?! - 28th Mar 15
Stock Market Investment Parachutes; Do You Have Yours? - 28th Mar 15
Peak Gold Misunderstanding, is Gold About to Run Out? - 28th Mar 15
Deflation Watch: Key U.S. Economic Measures Turn South - 27th Mar 15
The Hard-Earned Truth About Recreational Real Estate - 27th Mar 15
Bitcoin Price Still in Important Territory - 27th Mar 15
Stocks Bear Market Conditions - Index Market Range Warning - 27th Mar 15
BEA Leaves Q4 2014 U.S. GDP Growth Essentially Unchanged at 2.22% - 27th Mar 15
Brazil Economy Victim of Vulgar Keynesianism - 27th Mar 15
Gold to Fuel Silver Price Upleg - 27th Mar 15
Gold and Silver Stocks Will Rise Again! - 27th Mar 15
Risk of ‘World War’ between NATO and Russia on Ukraine as Yemen Bombed - 27th Mar 15
FOMC Minutes Turned The Gold Tide - 27th Mar 15
Sheffield Hallam Election Battle 2015 - Lib Dems Go to War Whilst Labour Sleeps - 27th Mar 15
Gold Effect On Mining & Shale Wasteland - 27th Mar 15
How Stock Investors Should Play the 2016 Presidential Race - 26th Mar 15
MidEast Energy Alert: Why the Crisis in Yemen Could Get Ugly Very Fast - 26th Mar 15
Stock Market Downward Spiral of Dumbness - 26th Mar 15
The Monetary Approach Reigns Supreme - 26th Mar 15
Stock Market Large Gap Down, Despite the Algos' Push Back - 26th Mar 15
Crude Oil Surges, Gold price Spikes as Middle East Tensions Escalate - 26th Mar 15
The U.S. Housing Market Recovery Is Fabricated Optimism - 26th Mar 15
Why Yemen Is The Next Saudi-Iranian Battleground - 26th Mar 15
The Crude Oil Price Crash and China Economic Slow Down - 26th Mar 15
Global Financial Markets Are More Distorted Than Ever Before - 26th Mar 15
One More Stock Market Rally and Then a Huge Drop Expected - 26th Mar 15
Danger Will Robinson - Stock Market Crash Warning - 25th Mar 15
Learn the Basics of Corrective Elliott Waves - 25th Mar 15
Why CNBC Is Hazardous to Your Financial Health! - 25th Mar 15
Will Your Retirement Accounts Survive The Coming Tax Code "Revolution"? - 25th Mar 15
US Dollar - Americas Phoenix - 25th Mar 15
California’s Epic Drought: Only One Year of Water Left! - 25th Mar 15
What’s Wrong With Silver? - 25th Mar 15
SPX Futures Appear Weak. WTIC and Gold May Be at Max Retracement - 25th Mar 15
We’re at the Dawn of a “New Energy Age” - 25th Mar 15
A Very Weak U.S. Economic Recovery - 25th Mar 15
Zero UK CPI Inflation Rate Prompts Deflation Danger Propaganda For Fresh Money Printing - 25th Mar 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

US Economy Still on Life Support

Bond Markets Offer No Protection From Stock Market Risk

Interest-Rates / US Bonds Sep 03, 2013 - 03:33 PM GMT

By: EWI

Interest-Rates

Bond yields spike to a 2-year high

Two months ago, Federal Reserve Chairman Ben Bernanke said he was puzzled by the upward surge in Treasury yields. And bond yields are even higher now, reaching a two-year high on August 15.


But the rise in bond yields - and the concomitant drop in bond prices since they move inversely to yields - is no surprise to EWI analysts. EWI's June 2012 Special Report on bonds noted: "If rates do begin to rise as we expect, most observers will probably be fooled. Bulls on the economy may take the new trend as a sign of economic expansion."

Indeed, on August 15, the financial media linked the spike in U.S. Treasury yields to economic improvement:

[B]ond prices tumbled after [the release of] stronger-than-expected economic data ... .

-- Wall Street Journal, August 15

U.S. Treasurys yields rose to their highest in two years on [August 15] after data showed that the number of Americans filing new claims for unemployment benefits fell to a near six-year low ... .

-- CNBC, August 15

Also note that the August 15 plummet in bond prices occurred on the same day that stocks took a triple-digit dive. So much for the mainstream idea that a portfolio should include bonds to balance stock market risk. In 2002, when Robert Prechter's financial best-seller Conquer the Crash was first published, he warned of what to expect in the kind of financial environment that we have now:

Conventional analysts who have not studied the Great Depression or who expect bonds to move "contra-cyclically" to stocks are going to be shocked to see their bonds plummeting in value right along with the stock market. Ironically, economists will see the first wave down in bonds as a sign of inflation and recovery, when in fact, it will be the opposite.

-- Conquer the Crash, second edition, p. 145

The lesson? If we are now in the early stages of a financial environment that is similar to what unfolded during the Great Depression, then it would serve investors well to learn what happened to bonds from 1929-1932.

How can you do that?

EWI's most recent publications tell you how the financial lessons of the Great Depression apply to today, and they give you an idea of how high bond yields could climb.

More than that, you can find in-depth analysis of the sweeping economic trend that could surpass the severity of the Great Depression.

Bonds just hit a two-year low. The impact on your portfolio may be significant, and the significance for our economy substantial. Elliott Wave International has released a special report on bonds. You can see a part of that report now -- FREE! See below for full details.


New FREE Report: 3 Dangerous Myths About Rising Bond Yields

More than a year ago, in the face of fierce opposition from the bond bulls in the forecasting industry, Elliott Wave International issued this contrarian forecast: "The bull market in the bond market is aged and ripe for a reversal. Generally speaking, if you are invested in long-term debt, sell it." Today, EWI has updated that original market-beating report with a vital four-page bulletin: 3 Dangerous Myths About Rising Bond Yields. Read it now for free >>

This article was syndicated by Elliott Wave International and was originally published under the headline Bonds No Safe Haven from Stock Market Risk. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world's largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.


© 2005-2015 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014