Macro Monitor
Bond Market Summary
In recent weeks the municipal market has been relatively weak compared to other fixed income markets. Long municipal yields are now 89% of long T-bonds, back up to about the levels where we recommended our unorthodox move in early February. It looks like a great opportunity.
Bond Market Summary
The bond market is also in the midst of secular and cyclical bull moves and the six-month consolidation may be over. If T-Bonds clearly exceed November 1982 peaks, assume the cyclical bull market is back on track with a cyclical target zone of 8.5% yields...lower on a secular basis.
What Happens to the Stock Market When Inflation is Accelerating or Decelerating?
An update of our historic research tracking all years of significant inflation acceleration and deceleration since 1900. If inflation does rise to 6% by year end 1983, the stock market outlook is not so bright.
Bond Market Summary
The bond market is also in the midst of secular and cyclical bull moves. But intermediate-term is now a question mark. However, if bonds exceed November 1982 peaks, assume cyclical bull market back on track. Go with the flow.
Bond Market Summary
It would appear the bond market correction has further to go. In a few months we will probably recognize this as the first interest rate “hiccup” of the economic recovery.
Opportunity in the Unlikely
Long-term municipals now extraordinarily cheap relative to other fixed income instruments. Strange as it may seem, Muni’s may even be relatively attractive for non-taxable portfolios.
Bond Market Summary
While it certainly does not appear the big bull market in bonds is over, it would not be surprising to see an additional five to eight-point correction from current levels.
Are Bonds Too Popular Now?
Dedicated portfolios, TIGR types, long-term bond buy and holders and bond traders soaking up the government financing like so many sponges. For long-term T-Bonds at least, the demand may be greater than the supply for a while, creating a premium situation. It’s hard to believe a T-Bond could become an investment rarity, but these are strange times.
U.S. 10-Year: Not All In Sync
· The higher-highs/higher-lows pattern since the 10-year yield trough in January is encouraging but the bigger test is the 225-230 area.
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March 2026 Issue
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