Macro Monitor

The pre-election target of 11.5% for T-Bonds was essentially achieved. Now the market looks overextended and a period of consolidation or correction is expected in November. Ultimately though, the upward move is expected to continue.

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We look for higher bond prices by the end of October, once the Treasury financing is out of the way. Pension fund lock-up buyers remain a strong positive factor. But what is really needed is some post-election indication of political fiscal responsibility.

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In some ways, the bond market is more impressive than the stock market. We continue to think it may be a brand-new ball game for a while with a growing number of new players. Throw out your old rule books? Our pre-election expectation for T-Bonds is 11%-12%.

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In many ways the bond market is more impressive than the stock market. In some ways I think it is a brand-new ball game with a growing number of new players. Throw out your old rule books. We have raised our maximum pre-election expectation for T-Bonds to 10%, up from 11%.

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T-bonds at their recent lows were down 30% from peak levels. Yes, it has been a bear market, but it may be about over. At minimum, a move to a 12% level is expected before election day.

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T-Bonds at their recent lows were down 30% from peak levels. Yes, it has been a bear market, but it may be about over. At minimum, a strong move to 11%-12% levels is expected before election day. Is the five-point move in recent days the 10 beginning of this? Maybe …

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I expect Zeros will make a bigger splash in pension circles over the next twelve months than did GIC’s, Index Funds, Venture Capital or Real Estate. Dr. Harold Ehrlich does not go quite that far, but he thinks Zeros should “be recognized as being among the most important financial instruments ever invented.”

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T-Bonds broke the August 1983 lows, but municipals and corporates still seem to be holding. Pessimism is rampant. Investors should consider buying T-bonds now. The biggest risk may now be not owning bonds. I expect a good rally momentarily.

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T-Bonds broke the August 1983 lows, but municipals and corporates seem to be holding. Pessimism is rampant. Investors should consider buying T-Bonds now. The biggest risk may now be not owning bonds. Positive action on the deficit could kick off a large rally.

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The bond market has come back down in our 12% (T-bonds) buying zone. We would buy Zeros and Long T-bonds. A short-term clear break to new lows would not surprise us, but our minimum 1984 Long T-bond target is 10.5%, maybe lower if significant action is taken on deficit.

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After drifting lower in December, the bond market drifted higher in January. Corporates turned in the best showing, with two-point gains fairly typical. Municipals were up 1 1/2 points while Long T-bonds moved up about a point. Yields declined 20 to 40 basis points, depending on the type of security.

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The bond market remains in our buying zone. We expect last summer’s lows to hold, and very soon, a sharp upward move in bond prices.

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The bond market remains in our buying zone. We expect the summer lows to hold, and very soon a sharp upward move in bond prices. The cyclical bull market target zone is 9% yields for T-Bonds in the next 12-18 months. Maybe much lower on a secular basis.

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A new set of risk-reward tables has been designed, exclusively for Zero Bonds. These tables will be part of a November Special Research Study, coming out under separate cover. But one of the timelier tables is previewed here.

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The bond market has backed off this last month and there is a remote chance it might even retest the lows. But it looks to me like the lows have already been made and the cyclical bond bull market is back on the track.

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The bond market is in the midst of both secular and cyclical bull moves. The cyclical bull market target zone is 9% yields for T-Bonds in the next 12-18 months. Maybe much lower on a secular basis. The recent correction carried to our 12% T-Bond buying zone and we loaded up again.

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A 12% annual compound growth rate can be locked in through the purchase of Treasury “Zeros.” Over 23 years this is a government guaranteed 1250%+ total return. In this extended research piece, risk is evaluated and the mechanics of creating and buying Zero bonds are discussed. Frankly, we were astounded by the results of this study.

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The bond market is in the midst of both secular and cyclical bull moves. The cyclical bull market target zone is 9% yields for T-Bonds in the next 12-18 months, maybe much lower on a secular basis. The current correction has carried to our buying zone and we are continuing last month’s new buy program in long T-Bonds.

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July and early August were quite unpleasant. T-bonds led the parade on the downside with yields rising over 100 basis points since our last issue. Damage in the quality corporate sector was not quite so severe, and the lower quality junk bonds only lost a few points.

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The bond market is in the midst of both secular and cyclical bull moves. The cyclical bull market target zone is 9% yields for T-bonds, maybe much lower on a secular basis. The current correction might run to 12%-12.5% for T-bonds, but we are tempted to start a buying program before that.

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