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What the Bond Market Is Trying to Tell Investors

The bond market is trying to tell us something.

If you look at the price of the iShares 20+ Year Treasury Bond ETF (TLT), you can see that bond prices are falling (i.e. bond yields are rising).

In fact, the decline in bond prices of late has brought TLT, which is a benchmark fund for long-term Treasury bond prices, down below key support at the 200-day moving average.

This is a big signal for markets, as it means that the smart money is lightening up on bond exposure after a protracted move higher since about this time last year.

That trend is telling, as it means that investors basically are pricing in a Fed rate hike in December. The last statistic I saw showed that traders now peg the chances of a Fed hike at the December Federal Open Market Committee (FOMC) meeting at 73%. That tells me rates are going up by the end of the year.

Another reason bond prices are falling — and bond yields are rising — is because the world knows that central banks haven’t been as aggressive on the monetary easing front as most thought they would be after the late-June U.K. Brexit vote.

That vote caused a spike in bond prices in late June. But since then, the market has slowly brought bond prices back down below pre-Brexit levels.

If you own long-term Treasury bonds here, now wouldn’t be a bad time to start to contemplate lightening up your position, as it seems like the glory days for this income asset are probably in the rear-view mirror.

In today’s issue of Successful ETF Investing, my subscribers will be receiving specific instructions on what bond funds to sell and what bond funds to hold.

If you’d like to find out more about this list, then I invite you to subscribe to Successful ETF Investing today!

***Publisher’s Note***

I am happy to announce that Mike Turner has joined the Eagle Financial Publications family. Mike and I sat down for a short discussion about investing that you can listen to by clicking here now.

In this interview, you will get to know Mike better and learn a few other things, such as:

  • Why most people buy and sell stocks at the wrong time
  • Mike’s 10 Rules for Investing that everyone should know
  • Why Bloomberg put Mike’s investing “Tools” product on more than 330,000 of its computer terminals
  • And lots more!

Listen to Mike’s insights on the markets by clicking here now.

The Heart’s Memory

“The heart’s memory eliminates the bad and magnifies the good.”

— Gabriel Garcia Marquez

The great writer’s insight here also applies to investing. Too often, we remember the great wins and what led us to them, and we forget about the lessons we learned when we lost money or made a bad decision. So, my advice to you is to try not to let the heart’s memory get in the way of your objective analysis.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Click here to ask Doug.

In case you missed it, I encourage you to read my e-letter column from last week about why there is still so much uncertainty in the market.

Newsletter Signup.

Sign up to the Human Events newsletter

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Exchange-traded fund (ETF) investing expert Doug Fabian discusses the readings we can get from the bond market right now.

archive

What the Bond Market Is Trying to Tell Investors

Exchange-traded fund (ETF) investing expert Doug Fabian discusses the readings we can get from the bond market right now.

The bond market is trying to tell us something.

If you look at the price of the iShares 20+ Year Treasury Bond ETF (TLT), you can see that bond prices are falling (i.e. bond yields are rising).

In fact, the decline in bond prices of late has brought TLT, which is a benchmark fund for long-term Treasury bond prices, down below key support at the 200-day moving average.

ltltlttlt

This is a big signal for markets, as it means that the smart money is lightening up on bond exposure after a protracted move higher since about this time last year.

That trend is telling, as it means that investors basically are pricing in a Fed rate hike in December. The last statistic I saw showed that traders now peg the chances of a Fed hike at the December Federal Open Market Committee (FOMC) meeting at 73%. That tells me rates are going up by the end of the year.

Another reason bond prices are falling — and bond yields are rising — is because the world knows that central banks haven??t been as aggressive on the monetary easing front as most thought they would be after the late-June U.K. Brexit vote.

That vote caused a spike in bond prices in late June. But since then, the market has slowly brought bond prices back down below pre-Brexit levels.

If you own long-term Treasury bonds here, now wouldn??t be a bad time to start to contemplate lightening up your position, as it seems like the glory days for this income asset are probably in the rear-view mirror.

In today??s issue of Successful ETF Investing, my subscribers will be receiving specific instructions on what bond funds to sell and what bond funds to hold.

If you??d like to find out more about this list, then I invite you to subscribe to Successful ETF Investing today!

***Publisher??s Note***

I am happy to announce that Mike Turner has joined the Eagle Financial Publications family. Mike and I sat down for a short discussion about investing that you can listen to by clicking here now.

In this interview, you will get to know Mike better and learn a few other things, such as:

  • Why most people buy and sell stocks at the wrong time
  • Mike??s 10 Rules for Investing that everyone should know
  • Why Bloomberg put Mike??s investing ??Tools? product on more than 330,000 of its computer terminals
  • And lots more!

Listen to Mike’s insights on the markets by clicking here now.

The Heart??s Memory

??The heart??s memory eliminates the bad and magnifies the good.?

— Gabriel Garcia Marquez

The great writer??s insight here also applies to investing. Too often, we remember the great wins and what led us to them, and we forget about the lessons we learned when we lost money or made a bad decision. So, my advice to you is to try not to let the heart??s memory get in the way of your objective analysis.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you??d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Click here to ask Doug.

In case you missed it, I encourage you to read my e-letter column from last week about why there is still so much uncertainty in the market.

Newsletter Signup.

Sign up to the Human Events newsletter

Written By

Doug Fabian is the editor of Successful Investing and High Monthly Income, and is the host of the syndicated radio show, "Doug Fabian's Wealth Strategies." Taking over the reigns from his dad, Dick Fabian, back in 1992, Doug has continued to uphold the reputation of the newsletter as the #1 risk-adjusted market timer as ranked by Hulbert??s Investment Digest. For more than 30 years, Successful Investing (formerly the Telephone Switch Newsletter) has produced double-digit annual gains. Doug has become known for his expert knowledge and timely use of innovative tools like Exchange Traded Funds, bear funds and Enhanced Index funds to profit in any market climate.

TRENDING NOW:

Dunkin Donuts Refuses to Get Woke: ‘We Are Not Starbucks’

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‘Reaganesque’: Economist Tells CNBC Trump Could Shift Global Order In China Trade War

FOREIGN AFFAIRS

Does ‘Impeach Trump’ Amash Have Financial Interests in China?

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Judge Who Ruled on Trump’s Finances is an Obama Donor.

U.S. POLITICS

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