Outside of equities, we saw a massive move higher in Treasury yields this week and a massive drop in Treasury bond prices. For the 20+ year Treasury ETF (TLT), this week’s 6.34% drop was its second worst week on record since it began trading back in 2002.

Below is a look at TLT’s historical weekly percentage change, and we also show how TLT has performed in the weeks and months following one-week drops of more than 5% like we saw this week. As shown in the table, TLT has normally continued lower for a while following big down weeks. Start a two-week free trial to one of our three membership levels to receive Bespoke’s most actionable ideas.

https://www.bespokepremium.com/interactive/posts/think-big-blog/long-term-treasury-etf-tlt-has-2nd-biggest-weekly-drop-ever

Continue reading →

Topley’s Top Ten – September 12, 2019

September 12, 2019

Matt Topley

Daily Top Ten No Comments

1.Real Yields (inflation adjusted) Go Negative.

Prior forays into negative territory during this cycle (in 2011, 2012, 2013, and 2016) have accompanied signs of slowing, but have also reflected the broader interest rate environment. Slower global growth, increasingly accommodative central banks, and some flight to safety due to trade uncertainty have all conspired to push rates lower.

The expected inflation rate implied by 10-year TIPS sits at about 1.5%, low historically but still higher than the cycle low and well above the near 0% hit in the heart of the last recession. Slower growth has minimized inflationary pressure, but over the last three months we have seen a modest pickup in inflation and wages.