Will Markets Vote For More Gains

**FINOMGROUP.com EXCLUSIVE** - A FINANCIAL MARKET RESOURCE FOR THE EVERY-DAY INVESTOR AND TRADER.

Back in the 1980s, Dr. Ed Yardeni popularized the phrasing that concerned an investor population, which was believed to be working to “fight the Federal Reserve.” He coined the phrase bond vigilanteism. As the Fed was cutting rates “on and off” from 1984 – 1988, often times the long end of the Treasury yield-curve would remain elevated, sometimes rising altogether. This was what Yardeni was referencing, as typically yields across most of the Treasury yield-curve would fall when the Fed was cutting rates. While the popularized phrase of bond vigilantes was fashioned in the 1980s, ultimately it proved to be nothing more than “prisoner of the moment” characterization of bond market price action that simply demanded time to for said price action to normalize. 

With the 10-year Treasury yield having risen some 65bps since the first Fed rate cut of the cycle this past September, there is a rising rhetoric that bond vigilanteism has returned. The cause; deficits and or debt. History has taught investors that while you may not win many friends rationalizing what is taking place in the market while assuaging popular rhetoric, you are more likely to extrapolate profits from the market. In the most boring part of this weekend’s macro-market Research Report, we will do just that, rationalize and factually represent what is taking place in the bond market, through fact-based data and historical insights. 

As our chief equity strategist Seth Golden has pointed out during the course of the past month, the Treasury Bond ETF’s (TLT) worst month of the calendar year over the past 20 years has been the month of October.