What’s up in the bond market?

By Prieur du Plessis, on November 22nd, 2011 posted in: Bonds, Investment Leave your comment

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I do not subscribe to the Lowry onDemand service, but receive the occasional short report from them. The paragraph below is of particular interest.

“The trends of the bond market, as well as the stock market, are the direct result of changes in the forces of supply versus demand. A recent review of the fixed-income ETFs on the Lowry onDemand website reveals a large number of issues reflecting significant negative divergences between their price patterns and our exclusive Power Ratings. Negative divergences occur whenever investor demand for a security weakens substantially while the price pattern is still in a relatively positive trend. Since it is difficult for prices to continue to rise in the face of weak investor demand, well-established negative divergences, as shown in the chart below, are typically followed by important price declines,” said the report.

If Lowry is right on this, it implies a flip to risk on, with better economic prospects, and declining bonds and rising equities.

Source: Lowry onDemand, November 22, 2011.

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