I think it is mainly about changes in market sentiments. When stocks got a break earlier this month from declining bond yields, which index led a stock market rally?: It was the (very) interest-rate sensitive Dow Jones. Today, which index is leading the rally?: The growth-sensitive NASDAQ. The remaining question is why aren't bonds bringing stocks down? The answer is in the yield curve. Short-term maturities -- taking into account the volatility differences between maturities -- have a much smaller propensity to go down than longer maturities because inflation worries have been a much bigger concern than fears of stiff short-term rate hikes since late February.
Yes, your statements are true. The Bond market hampered the cyclicals today. But the large growth stocks, which have been seriously lagging are beginning to catch up. You have to note that the DOW rally started in January, and the SPX in February. The growth stocks only got going 2 1/2 weeks ago. It's been a staggered market. When the FED issued the statement yesterday, I knew in the end it had to good for the growth stocks. And, if it's good for the NAZ/NDX its good for the market. NAZ new closing high today
Reminds me a lot of 2000. Fed raising rates, curve flattens/inverts, and the stock market hits new highs. Do I need to tell tell you what happened next?
Well actually a similar situation happened in 1989-90 too. So we'll have to see which market shows up this time the dotcom, or the dotblastoff
Hey Doc, You need not wait the outcome of the Chinese torture test. There are better opportunites at the source right now: CHINA Just a pun about the torture. But China just started it's bull !
Ive been a keen reader of this post for some time now , i know you guys mainly look at US Bonds, i trade european bonds mainly euribor just wondered if any of you guys have been watching these and have any thoughs. Thanks.