Earlier this week, we noted that “the Consensus Hates Bonds.” That is a small part of the reason my firm decided to increase our exposure to specific types of fixed income this year after having been significantly underweight bonds in 2013. I mentioned we added preferreds and corporate fixed income, obtaining that exposure primarily though exchange-traded funds.
That struck a chord with J.C. Parets, a chartered market technician. J.C. is founder of Eagle Bay Capital, LLC, and is the author of the blog All Star Charts. He sent the two charts you see on this page.
The chart below simply shows how little love there is for fixed income. The chart above is trickier.
Parets notes the 10-year yield is exhibiting a “nasty false breakout over the holidays, along with gross bearish divergence in momentum as well. Not pretty.” That’s what you might expect from an asset class that has become more or less universally disliked.