I see reports of very good housing numbers this morning. The purpose of this blog is not to debate the quality of fundamentals and “expected” price action related to the data. My only concern is what price actually “does” with respect to any new information.
Bonds are in a long term downtrend and have shown weakness in the short term following a nice bounce during the equity bull market phase of 2002-2007. This morning I see that bond prices are flat in the face of the good housing news. I also see bond prices are higher now (yield lower) than a few weeks ago when the government was selling large quantities of new issuance.
The 10 year bond yield dropped into November 2008 at four times the slope of the raise from 1961-1981. Since November yield has bounced back to the slope of the long term increase and has found resistance. Ignoring the short term, the long term shows a series of lower yield highs and nothing has changed on the chart with respect to the bounce in November.
The 30 year bond is somewhat stronger than the 10 year treasury. But again, yield is well off the 2007 high (which was lower than the previous peak). A yield drop to the 50/50 point at 4% at the end of September would not surprise me at all.
The 90 day note yield has remained below 0.2% for several months. The big money has found no reason to move out of this safe haven which started to draw in money during 2007.
http://www.thestreet.com/story/10590765/1/kass-market-has-likely-topped.html