Asset Class Report: Bonds

Bond Market Breakdown

This article is meant to be the first of the “Asset Class Reports” (see “About” Section) focusing on bonds. I laid out the updated version of this Substack in this report: link

Today we are focusing on interest rates across the curve, their specific drivers and the R:R as we move into the end of Q4.

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Big Picture:

As you know, I was bearish bonds from August until recently. You can review my analysis on this in the macro reports (here: link, link, link, and link). Demand was relatively constant but supply increased due to the actions of our favorite Secretary of the Treasury, Janet Yellen (😉).

Like any market, interest rates move based on supply and demand. We simply need to break down the specific drivers of BOTH supply and demand as they change dynamically through the economic cycle (see the bond market educational primer I wrote here: link).

The impulses from both supply and demand frame the current situation and the R:R for running trades. We are at the beginning of an inflection point but the timing will be key due to the tensions that currently exist.