Igor wants to know what's up with interest rates...
We went through Treasury auctions this week, including the 30-year today and the 10-year yesterday. The supply was likely an issue, but people are already starting to see the end of Twist (in June, I believe). With the stock market lighting up and the economy skating away from the risk of recession, bonds are a poor near-term choice. This doesn't surprise me at all.
A few weeks ago, I warmed up to gold a bit (added GDX to my Sector Selector ETF) as a hedge against the Fed erring with too much easing. Gold has performed very weakly along with bonds. Recall that both of these have really been helped by the "fear trade". So, this looks like a dose of fear trade reversal combined with supply and the realization of deteriorating technicals (of the Fed buying).
In my Conservative Growth/Balanced model, we have a MINIMUM allocation to bonds, and it's all in lower-duration Mortgages - ZERO TREASURY EXPOSURE. So, I am loving this action...
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