If you have been negative on bonds as I have, these charts should enable you to sleep much better.
Virtually every fixed income product is peaking now. Let me draw a simple picture for you laymen out there. That means you should sell every major bond market rally for the next ten years. It’s looking like the 1.38% yield we reached in the Treasury bond market will be the absolute nadir.
The technical set up is now so dire, that bonds are going to have a really tough time rallying from here. The momentum players will eventually smell blood in the water, and they’ll be jumping in with both feet at every opportunity. The lost decade for bonds has begun!
Of course, you knew this was coming. It doesn’t help that the budget proposals for both political parties going forward will engineer a dramatic increase in the deficit. The bond market is not laughing. It is time to dump that old investment guideline where you own your age in bonds. From here on, the bond/equity ratio should be 0% in bonds and 100% in equities, whatever your age. You now should own your age in high dividend paying equities and the balance in aggressive growth or emerging market equities.