I’m hearing some chatter that says bond traders and analysts are stepping aside from the bond rally. Or are planning to do so.
Their argument is that the move has been too far, too fast.
Specifically, I’ve heard talk of selling if the yield on the 10-year Treasury hits 4.00%. On Friday, the yield was 4.20%. The yield on the 10-year Treasury fell 60 basis points in November after hitting a 16-year high of 5.00 at the end of October
So I’d be watching to see if anything like a bond rally pause or reversal materializes during the days ahead of the Federal Reserve meeting on December 13. As per usual, some bond holders will get nervous ahead of that big event–with a Dot Plot that will project interest rate expectations into 2024–and look to sell ahead of the news or at least hedge.
Today, December 4, the yield on the 10-year Treasury was up 6 basis points to 4.25% as bond prices fell.
Stocks by and large moved lower on the day.
The Standard & Poor’s 500 was off 0.54% at the close and the Dow Jones Industrial Average slipped 0.11%. The NASDAQ Composite and the NASDAQ 100 were lower by 0.84% and 0.99% at the close. The small-cap Russell 2000 bucked the trend and rose 1.04%.
The CBOE S&P 500 Volatility Index (VIX) gained 3.56% to 13.08.
Oil fell with U.S. benchmark West Texas Intermediate losing 1.08% to $73.27 a barrel. International benchmark Brent crude slid 0.88% to $78.21 a barrel.
Gold was down today with gold for February delivery on the COMEX dropping 1.97%.
