New lows for stocks overnight, and new highs for bonds (man, do I wish I hadn’t gone flat yesterday afternoon). By the way, that fractal played out, since the small decline into the close yesterday foretold a greater decline overnight.
S&P futures in white, 30-year treasury futures in blue here. You can see that they have each formed a megaphone pattern. We’ll see if they respect them today or slice right through in a panic.
Source: Interactive Brokers
And for those who are waiting with baited breath for the long bond to collapse, consider this 3-month chart of futures for 30, 10, 5 and 2 year treasuries. They all still move together, and they all go up as stocks go down.
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But of course risky debt moves opposite to treasuries — just when you most need bonds for safety, it trades like the stock market. Here’s a 3-month shot of TLT (blue, 20-30 year T-bonds), JNK (red, junk bonds) and HYD (green, high-yield munis):
Source: Yahoo! Finance
Mike,
I am trying to understand the case for being long TLT for (let’s say) a year. Is it (1) the Fed won’t dare raise rates while the market is tanking; (2) flight to safety will drive demand for U.S. Treasury debt; and (3) the Dollar’s generally unexpected strength? Thanks–
That’s the right idea. Basically, bonds are cash for big boys. Stocks down = treasuries up. Why should this be any different now that at any point in the last 2 years?