Crazy political news marked the weekend talk shows as President Trump’s accusation of wiretaps met with denials from the head of the FBI followed by with word that the Trump administration doesn’t accept the denial. This news has rocked an overbought stock market but interestingly hasn’t boosted the bonds which although starting higher are working the way down to Friday’s lows. This is a bit surprising, especially since an economic report this morning showed core factory order slowed to six month lows. The risk parity funds are seeing some turmoil since bonds are not offsetting the negative action in stocks and pressure on this type of hedge fund could start to mushroom. Later this week the monthly jobs number is likely to show a further tightening of the labor force. If this report does put some pressure on bond prices and a very richly priced U.S. stock market can’t rally, the bonds might just resume the downtrend that began last summer. After today the Fed enters a quiet period in front of an important March meeting on the 14/15 at which expectations are that short-term rates will rise and some clarification of how soon they might be again pushed higher should come out of post meeting news conference.
30-Yr Treasury Bonds Daily Continuation Chart