Macro Monitor

The early April surge in the bond market stalled out at the late February highs, beating a hasty retreat in the last week of the month.

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Debt monetization evaluated by three separate measures. All three measures suggest monetization is increasing, however the severity of this trend is debatable. Judge for yourself.

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Corporates managed a gain in March but Treasuries were weak near month end. Developing an “unbiased” Bond Market Trend Index based on a list of factors that we feel are important in determining the overall health of the long U.S. bond market.

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There were two mighty explosions in lower Manhattan in February. One was horrible and the other wonderful, at least for the banks and brokers who had loaded up on bonds and notes. However, from this publication's standpoint, both explosions were pretty much viewed as horrible. (See comments later in this section.)

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1993's bond market has started on a strong note, with gains of two points or more in long T-bonds.

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The fixed income markets ended the year on a strong note.

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All things considered, I think November's long bond market performed surprisingly well.

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Yes, the fixed income markets are confusing these days. Maybe the fog will clear after the election. But here on November 2nd, I won't speculate on that.

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The bond market is looking increasingly vulnerable. The economy appears to be deteriorating, inflation is nowhere in sight and short rates are declining. With all this going for it, why is the bond market stagnating?

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My current view towards long bonds from an institutional investor's point of view is to sell some now and sell some more when longer term momentum slows.

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Overall, July was one heck of a month for the fixed income markets. Most of the move in short term paper came early in the month but longer term fixed income securities continued their steady rise until the last three days of July.

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June was a rather steady dull month in the bond market but there was a pre-4th of July explosion on the upside as bond market grave dancers cheered the stunning jump in unemployment.  

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The bond market, helped out by some good CPI and PPI numbers, scored typical net gains of 2+ points in May. Long bond yields, corporates, treasury zeros and treasury coupon bond yields fell 20 basis points....all in all, a pretty good month.

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The bond market continued to edge higher in the first part of April, but then the Chicago River drained the T-bond market of its liquidity, flooding out T-bond and T-note futures trading.

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The bond market sagged in the first half of March as the economic outlook improved, deficit dears increased and the crowd of early 1992 bond market bulls pulled in their horns.

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The T-bond market continued its slide in the first hald of February, extending the peak to trough decline to 60 basis points.

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Most of January was a downhill ride for the bond market, although high yield (junk) bonds typically moved up 2 or 3 points.

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In November, long and short rates did not move together, but in December they sure did.

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The long bond market edged to a marginal new high in mid-November but sagged in the last half of the month. On the other hand, short rates fell sharply. Once again it has been demonstrated that long and short rates do not have to move together.

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Even though higher quality long bonds stalled in October, short rates continued to decline in anticipation of yet another cut in the discount rate. Once again it has been demonstrated that long and short rates do not have to move together.

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