Gary Kaminsky Talks Post-Election Bond Markets
After a massive U.S. government bond selloff, an interest rate hike almost guaranteed before the end of the year and global deflationary pressure on global currencies, questions about where the bond markets might be headed abound.
Gary Kaminsky, host of "Wall Street Week" on Fox Business, sat in on Thursday's PreMarket Prep and provided some thoughts on the current state of the bond market and what investors can expect for the rest of the year.
Politics And Market Pressure
One of the biggest pressure's has been the market's over-anticipation of the incoming presidential administration's promise of regulation changes. "Since the election there’s been $1.7 trillion lost in the Barclays global bond index — around a 4 percent decline, which is the largest monthly decline since that index started in 1990. At the same time, global equity's up 635 billion," Kaminsky commented.
Kaminsky further explained that a lot of movement in the bond market has been fueled by estimations of global inflation trends hitting the United States as well as the resultant interest rate hikes. "I know a number of bond pundits, the same ones [who] were saying we're going to see 1 percent on the 10 year, now they're saying we're going to see 5 or 6 percent on the 10 year. I just don't see it; there is too much arbitrage between the negative rates around the world and the deflation that's being exported from Asia."
Overall, Kaminsky pointed out that the current rate of U.S. bonds is the result of a lot of factors, "We'll come back three months, six months, look back and say, ‘That was a gift.’ Rates went up too fast for the wrong reasons. We're still in a slow growth environment. We'll still be talking about getting to that 3 percent, 4 percent sustained GDP a year from today."
PreMarket Prep is a daily trading ideas show that focuses on technical analysis and actionable short term trades. You can listen to the show live every morning from 8–9 a.m. ET here, or catch the podcast here.
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