The CPI numbers came out Thursday and registered a historic annualized 7.5% inflation rate. That’s the biggest high in 40 years and why they are calling it historic, but if you can remember these numbers were called historic just a few months ago! The inflation was supposed to slow down this year, but so far that has not happened and it is helping to drive the value of bonds down and bond yields up, which right now is the strongest trend in the financial markets.
Check out the LQD ETF for instance.
The LQD ETF made a new low yesterday and is now so far away from its 150 and 200-day moving averages that they are going to act as resistance for a long-time. The reality is that bonds made secular lows in 2020 when the Fed took rates to zero and brought a record peak in the value of bond funds. That top has been made and now we in a secular bear market for bonds. The logic is that simple even if technobabble bulls like Cathie Wood deny it.
Bonds are in a slow motion bear market and that fact will be one of the defining features in the financial markets for years.
I actually own some puts in LQD, that I bought last year for hedges on long positions in my accounts.
That’s not a recommendation to buy, but simple disclosure.
I talked about bonds, commodities, and gold with Jim Goddard of www.howestreet.com in this interview.
-Mike
