Category Archives: Bonds

Why You Do NOT Want To Short The Bond Market

Every trader I know has tried their hand at shorting the bond market on thoughts that yields are eventually moving higher…only to donate to the bulls.  There is some thought out there amongst the bigger money players that as the US stock market continues to surge higher and the largest Pension Funds try and keep their 60/40 “stock-to-bond” ratio, they are constantly being forced to liquidate stocks and buy more bonds.  In other words as the price of stocks keep moving higher it pushes them more towards a 70/30 “stock-to-bond” ratio. In order to get it back in sink and closer to their traditional 60/40 ratio they simply scale back the stock side a bit and add a few more bonds. Hence, it’s going to be tough to win the short battle in bonds as long as the stock market is making fresh NEW highs.