ePayments1 768x90
View RSS Feed

newdigital

The Week Ahead: Is Now the Time to Change Your Strategy?

Rate this Entry
by , 05-19-2014 at 03:22 AM (1052 Views)
      
   
It was a wide-ranging week for the stock market, while bond prices kept rising as yields hit new six-month lows. Though volume for the week was low, the daily volume was a bit higher on the down days. So Is Now the Time to Change Your Strategy? The sharp selloff was blamed in part on the comments by a well-known hedge fund manager while others guessed that the ?sell in May crowd? decided to pick the middle of the month to dump their stocks. So is now Is Now the Time to Change Your Strategy?

In any case, many investors and traders seem to be risk adverse as we head into the often-difficult summer months. The decline in yields has been a global phenomenon as this table from Bloomberg illustrates. It shows that while the yield on the US 10-year T-note has dropped 11 basis points in the past month, those in Germany and France have declined 17 points.

Name:  bonds1.gif
Views: 45
Size:  132.7 KB


Even more surprising is the 22 basis points decline in the 10-year bonds in Mexico and Brazil. On a yearly basis, the bonds of Portugal and Greece have declined over 160 basis points in the past year.

The yields on the 10- and 30-year US Treasuries have not yet dropped below their key support levels but they are much closer now than they were last week. A break of these levels would indicate a further drop in yields but I would still not chase the long side of the bond market.

If you have been shortening the maturity of your bond portfolio as I first recommended a year ago, you shouldn’t change the structure of your bond portfolio now. If rates drop further, it will lag the performance of a longer-maturity portfolio. However, the outlook for rates over the next few months is uncertain, and I think yields are likely to be significantly higher a year from now.

Name:  bonds2.gif
Views: 67
Size:  78.4 KB




More...

Submit "The Week Ahead: Is Now the Time to Change Your Strategy?" to Google Submit "The Week Ahead: Is Now the Time to Change Your Strategy?" to del.icio.us Submit "The Week Ahead: Is Now the Time to Change Your Strategy?" to Digg Submit "The Week Ahead: Is Now the Time to Change Your Strategy?" to StumbleUpon Submit "The Week Ahead: Is Now the Time to Change Your Strategy?" to reddit

Comments