Many investors are focused on the Dow hitting the 20,000 milestone, but compared to another key technical level, Dow 20,000 is a B-lister. Here the Financial Times points out that the key technical indicator to watch is the 2.60% yield level on the 10-year treasury note. According to former “Bond King” Bill Gross, if the 10-year yield crosses the 2.60% threshold, it will signal the start of a secular bear market in bonds.
The FT has more of the details.
The Janus portfolio manager, dubbed the “Bond King”, warned that if the 10-year yield crosses that threshold, it will signal the start of a “a secular bear bond market”.
The yield shot up from about 1.8 per cent prior to the election of Donald Trump in November, to as high as 2.6 per cent the following month. It has since receded to roughly 2.4 per cent.
If the yield manages to push above 2.6 per cent, it would break a trend-line that has been in place since the late 1980s, according to Mr Gross’s calculations. “It is the key to interest rate levels and perhaps stock price levels in 2017,” Mr Gross said.
What is the proper way to invest in fixed income during a secular bear market in bonds? For self-directed income investors we offer fixed income portfolio strategy advice in Intelligence Report. For those not interested in the hassle and heartache of self-directed portfolio management, Richard C. Young & Co., Ltd manages portfolios that are focused on cash flow—both dividends and interest income.
Jeremy Jones, CFA
Latest posts by Jeremy Jones, CFA (see all)
- Cities of the Future - August 17, 2018
- Is Voice Shopping Already Dead? - August 16, 2018
- A $35k House that Makes its Own Water, Grows Food, and Is Energy Self-Sufficient. - August 15, 2018