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What if the Bond Market is Right? - Real Time Insight

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Despite the Fed winding down its bond purchases, the 10-year treasury yield has dropped to a multi-month low of 2.47%.

This isn't how it was supposed to be. Nearly all forecasters have predicted a higher bond market this year, with some saying the 10-year could rise as high as 4% as the economy improved and in anticipation of the Fed raising the Fed fund rate next year.

Many are calling this a "conundrum."

The last time the pundits called the bond market a "conundrum" was in 2007.

In July 2007, after the Bear Stearns hedge funds imploded, the 10-year yield began a 1.5% decline even though stocks continued to rally. The S&P 500 would hit a new high in October of that year.

It wasn't until 2008 that the stock market began to sell off and the financial crisis picked up steam.

The Dow Industrials and S&P 500 both hit new highs again this week, diverging from the bond market.

What if there isn't a bond market "conundrum" at all?

What if the bond market is actually calling it right?

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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