about the discrepancy between the dynamics of the bond and stock markets, began to write suspiciously for some reason now. in principle, the rally has been going on since April. as well as the fall of the stock market. the difference is only in the amplitude of oscillations – profitability falls more actively. from an aggressive decline in profitability, a conclusion is drawn about the inevitable decline in the stock market, because the bond market isn't wrong.
generally, that's how it is, but there is a nuance.
since the dynamics of bond yields – trendy thing, as well as the dynamics of the stock market, in order to compare something, we will look at the annual change in monthly values. for that, to make it easy to repeat, data starts at their beginning for 10 year Treasury yields on st.louis fed site.
three clicks on the picture increase its size to a pleasant scale.
what you see is described by a simple idea – certainly, the yield moves with the dynamics of the stock market (causally, rather the opposite, Really. ie. shares for bonds:)). but a) not always in the short-medium period, b) extent of fluctuation – it's such a thing.
basically we need to answer two questions:
1) is the current state stable
2) if not stable, то какой рынок ошибается.
in fact, our market divergence has been going on since at least autumn 2009 of the year. (what did you seriously think, that someone will raise some rates, or whatever 10 years will be higher 5%?:)). and since autumn 2009 both the bond market and the stock market have already managed to be wrong alternately. and the stock market is above autumn levels, and the bond market is higher.
that's why, there is no definite answer to the first question. not so much unambiguous in terms of theory, how much in terms of timing. although after a year, I will not be surprised to see both that and that market a little higher from the current levels (not the main idea, best case scenario – опциональная).
let's go straight to the idea of, какой же рынок ошибается.
my version is that. the bond market is wrong in the short term. bond market today) overcrowded, b) moved from discounting not V, a U-shaped recovery, hence such agility and obvious momentum. if we don't go to double-dip (which was always more likely than a V-shaped recovery, but never was a baseline scenario), then during 1-2 months, the shares will be about the same or slightly higher, but yields will grow, but slightly. because in the medium term, it is the stock market that is wrong;) в долгосрочном, rather, the bond market is wrong (from 5 years) – & quot; Japanese script" against fiscal problems and the vitality of the American economy = a lost decade is not ahead, and have been with us for a long time;)
