WEDNESDAY JULY 7, 2010

Scared Bond Market

One thing is clear.  The bond market is calling for a deflationary environment.  The 30 year Treasury bond is yielding 3.89%  and the 10 year note is yielding 2.92%.  Recall that the the 10 year note breached 4% on April 5th.  That's a 27% decline in interest rates in less than 4 months!  The bond market is firmly in the double dip camp.  Yet, that very decline in rates could provide the fuel that helps prevent the double dip.  I continue to be amazed at the robustness of the bond market.  Could it be that a bubble is forming in the Treasury bond market?  If we do not actually get a double dip, there will be carnage in bonds.  Buyer beware. 

POSTED AT 1899-12-30 08:35:00.0

KEN ENTENMANN, CFA
SENIOR VICE PRESIDENT AND
THE DIRECTOR OF INVESTMENT MANAGEMENT SERVICES

Ken is a Senior Vice President and the Director of the Trust and Investment Services at Alliance Bank, N.A. He has 23 years of investment experience and oversees the management of assets totaling $1 billion. He holds a B.S. in Applied Economics and Business Management from Cornell University and an M.B.A. from the William E. Simon Graduate School of Business Administration at the University of Rochester. He has also earned his Chartered Financial Analyst designation. He is a member of the Executive Committee of the Trust Division of the New York Banker's Association. He is also a director of the Central New York Community Foundation.

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