Yesterday, there was an article in the Sunday New York Times worth the price of a years subscription. “Clouds Are Forming Over the Bond Market.” In addition to the four over-valued metrics I’m tracking, this article adds another warning message. Check to see if there is a yield-curve inversion taking place. In short, watch what the FED is doing with interest rates. If they continue to raise interest rates, prepare for a decline in equities.
In the NY Times article, author Sommer discusses the yield-curve inversion. This is when the yield for long-term bonds is below the yield for short-term bonds. This morning I checked the yield for BLV (long-term bonds) and it is 3.81%. The yield for short-term bonds (BSV) is 1.51% or still well below long-term bond yields. These two yields should be on your radar.
ITA readers, if you missed this blog post, check it out again and take a look at the new values when you activate the included links.
As portfolios come up for review, I’m more interested in looking for securities to sell than I am seeking buying opportunities.