PIMCO - Bullish on Bonds
Bill Gross says that bond yields have peaked:
. . .yields have peaked in the bond market and will soon peak in Fed Funds producing an economic slowdown in 2006. If the Fed goes beyond 4½% and inverts the yield curve, the possibility of recession will increase. Observant readers will have already noted that the current data point in Chart I is not only calling for an end to the bear bond market, but a recession at some point 12-18 months hence. Perhaps. Much will depend on the future condition of the U.S. housing market and of course global economies - primarily of the Asian variety. We shall see. But for now, hopefully you can take solace from a new timing indicator that says the worst is over for bonds and an indicator that should keep on giving in terms of its reliability for years and years to come. Enjoy and Happy New Year…for bonds!