Best of the Week
Most Popular
1.RED ALERT: Paris Terror Attacks - What to Expect Next - STRATFOR
2.Paris Terror Attacks, Death Pangs of a Dying Religion, and Impact on BrExit EU Referendum - Nadeem_Walayat
3.Paris Terror Attacks, Islamic State Attempting to Spark Civil War in France - Nadeem_Walayat
4.Three Shocking Charts That Prove Gold Price Rally Is Coming - Sean Brodrick
5.Stock Market Nifty-Fifty Becomes Fab-Five; Return of the 'Four Horseman' - Mike_Shedlock
6.Africa Population Explosion - Why Europe's Migrant Crisis is Going to Get A Lot Worse - Video - Nadeem_Walayat
7.Gold Mining Stocks May Be The Buy Of The Century - Jeff_Berwick
8.Grandmaster Putin Beats Uncle Sam at His Own Game - Mike_Whitney
9.BRICS? No, CRISIS - Raymond_Matison
10.UK Housing Market Affordability, House Prices Momentum and Trend Forecast - Nadeem_Walayat
Last 5 days
Stock Market Consolidation Week - 29th Nov 15
A Black Friday for Gold Prices - 29th Nov 15
Politicians Driving The World Towards War - Fourth Turning - 29th Nov 15
Stock Market Down Monday, Gold Price Bottoming? - 29th Nov 15
Turkey Downs Russian Jet to Draw NATO and US Deeper into Syrian Quagmire - 28th Nov 15
Stock Market Quiet Week as Primary 5 Continues - 28th Nov 15
Black Friday, Weekend for Europe's Migrants - 28th Nov 15
HUI and Gold - Who's Leading Whom? - 28th Nov 15
Gold And Silver - No Ending Action, But End May Be Near - 28th Nov 15
Social and Cultural Distress Dividing The Nation - Fourth Turning - 28th Nov 15
Sheffield Houses Prices 2015, Best Estate Agents As Rated by Buyers and Sellers - 28th Nov 15
Stock Market Top Valuations, at a Critical Juncture - 27th Nov 15
The Top Shopping Opportunity on Black Friday - 27th Nov 15
Economics Is About Scarcity, Property, and Relationships - 27th Nov 15
UK Immigration Crisis Hits New Extreme of 336k Net Migration, up 32% on 2014 - 27th Nov 15
Vauxhall Zafira B Fire Danger Recall - What to Do Video - 26th Nov 15
Triggers In US Dollar Collapse - 26th Nov 15
Apple Stock is a 10-Year Short - Bear Market Environment - 26th Nov 15
U.S. Federal Reserve Rate Hike - 26th Nov 15
George Osborne's War on Buy to Let Sector Trending Towards Doomsday - 26th Nov 15
Will Turkey Drag NATO into War With Russia in Syria? - 25th Nov 15
George Osborne’s Autumn Statement and Spending Review Full Text - 25th Nov 15
Will Fresh QE From ECB Boost Gold? - 25th Nov 15
Sheffield, Yorkshire and Humberside House Prices Forecast 2016-2018 - 25th Nov 15
Investors Watch Out For The Auto Industry… - 24th Nov 15
BEA Revises 3rd Quarter 2015 US GDP Economic Growth Upward to 2.07% - 24th Nov 15
Stock Market Supports Are Being Broken - 24th Nov 15
Is Gold Price on the Verge of a Breakout? - 24th Nov 15
Fed’s Tarullo: U.S. Interest Rates Liftoff Should Wait for Signs of Inflation - 24th Nov 15
Silver Price, COT, US Dollar Updates and More - 24th Nov 15
UK Regional House Prices Analysis - Video - 23rd Nov 15
Crude Oil Swinging For The Fences - A 20 to 1 Option Play - 23rd Nov 15
US Dollar, CRB, Oil, Gas, Copper and Gold - The Chartology of Deflation - 23rd Nov 15
UK Regional House Prices, Cheapest and Most Expensive Property Markets - 23rd Nov 15
Stock Market Rally Losing Momentum? - 23rd Nov 15
Will Gold Price Drop Below $1000 Soon? - 23rd Nov 15
Gold and Silver Sector Big Green Light and Low Risk Entry Setup... - 23rd Nov 15

Free Instant Analysis

Free Instant Technical Analysis

Market Oracle FREE Newsletter

Reasons to Get Excited About Japanese Stocks

Bond Markets Offer No Protection From Stock Market Risk

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



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 - 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

Biggest Debt Bomb in History