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TommyIV's TSP Talk Blog

Bonds are the New Stocks

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The bond market lost its grip today. The bond ETF BND (F-fund) lost more than 1% today while U.S. stock indices closed within 0.1% of Friday's price. The difference in price range is counter to what you'd expect between stocks and bonds. U.S. Treasury issued bonds are typically thought to be a safer bet and less volatile than stocks. In normal economic conditions, the assurance of the U.S. government to pay back bond holders keeps yields (and thus bond prices) relatively stable.

But now the validity of that assurance is dwindling. Today Janet Yellen warned the U.S. may be unable to pay all its obligations as soon as June 1st. Without an increase in the debt limit, the U.S. could default on debt for the first time. The country's ability to pay its debt is the foundation of what makes the U.S. economy a world economic powerhouse. There is little hope as of now coming out of congress that the issue will be resolved soon with both parties strong opposing the other. This is not the only matter threatening the stability of the bond market but is coupled with high inflation, a hawkish Fed, and other economic worries.

Now we are seeing an atypically volatile bond market. But it doesn't look like it is all one direction. The ETF BND (F-fund) price has bounced in a trading range established over the last month and a half. Today's 1% loss put the price at the bottom of that trading channel which is held by its 50 and 200-day EMAs as support. What may look like a buying opportunity for the excited bond market is not grabbing TSP Talk members' attention. Only 3.25% of allocations among non-premium TSP Talk AutoTracker members are in the F-fund. And after a 1% drop today, not a single member bought into the F-fund today.

Treasury Chief Janet Yellen Says U.S. Risks Default as Soon as June 1 Without Debt Ceiling Increase

Thomas A Crowley
Last Look Report
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  1. FireWeatherMet's Avatar
    Yes those in Bonds definitely got F-ed over today☹️

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