The world–wide decline in bond prices this Fall has been triggered by talk that Central Banks would turn a blind eye to inflation for a time going forward. This possibility reached a crescendo in Sunday nights trading session, as the A.M. New York session left some aggressive sellers stranded below 16307. U.K. government bonds (Gilts), which have led the global rout all month, found some bargain hunters Monday also dropping yields back from 1.22 to 1.12. The pressure on the British currency has also abetted a bit, which may encourage some confidence that the worst is over for now. However, the bigger issue is that there is a general notion that a generational low in world-wide bond yields may have been put in, so rallies are likely to stall awaiting fundamental developments. Whether or not this will prove to be the case, after 31 years and many previous tops that turned out to be just pullbacks in the great bull market, only time will tell. Today’s CPI read was very benign and traders looking for any up-tic in inflation trends didn’t get it, helping notes and bonds hold yesterday’s recovery. The rest of the week will see a number of Fed members speaking. The Philly Fed Outlook on Thursday might also be a market mover.
Series 3 Licensed
Senior Market Strategist
Jim began his career back in January of 1976 at the Mid America Commodity Exchange, trading grains. He moved over to the Chicago Board of Trade in 1980 and started spread trading the then-new Treasury bond contract. Jim remained a local on the CBOT floor over the next 12 years, alternating between the soybean and bond pits. In the early 1990s he made the tough decision to move off the floor in order to build a brokerage business. In 1995 he joined Lind-Waldock. Many of his earliest clients remain active traders and those longer-term relationships are the best aspect of the job. Jim holds a BA in Economics from the University of Wisconsin-Madison.