Tackle Today: Yields Down Big
November 3, 2023
«Everything Else Up»
Coach Mark here.
Yields have been a major story in markets for the last two years and have taken the front seat/center stage position in investors minds the last three months. The market volatility that started back at the end of July can be linked to yields climbing. The correlation has been well known and created pressure on equities, bonds, and even precious metals at different times.
The 10-year Treasury Index has been in a free fall the last couple of days helping fuel sentiment in the market. Ever since Bill Ackman publicly announced the closing of his short bond position last week there has been shifting volatility at the top of the yield chart. This week that went into overdrive.
This week we have had weak economic data, the Treasury announcing less issuance than expected, the Atlanta Fed chopping their GDP forecast down to 1.2% for the 4th quarter and the cumulation today of unemployment missing noticeably. It has been a good macro week for bonds, a bad week for yields, and markets collectively exhaling from the pressure that higher yields were creating.
Does that mean there are only blue skies ahead? Of course not. But the drop in yields is noticeable and makes certain areas of the market for me particularly interesting moving forward (dividend stocks I am looking at you) but more on that next week.
Have a fantastic weekend everyone!
Chart of the Day: 10 Year Treasury Index (TNX)
That isn’t a pretty chart. The lack of beauty in the 10-Year Treasury chart is making a lot of other chart a lot more appealing in their inverse correlation to yields.
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