The Immortal Bull Market

No, I am not referring to equities as the "immortal bull market."

Instead, I am referring to the forty-plus year bull run in Treasuries, with rates falling since the early-1980s up until the pandemic. As you might imagine, that length of the bull run in the bond market lulled several generations of investors to sleep, even seasoned market veterans who ought to know their history better. 

Specifically, when the bond market finally does revolt, as I believe it is doing so now against both The Fed and Congress/Treasury, it becomes far more difficult to keep easy policies going at full blast, be it going soft on inflation (The Fed), passing monstrous pork-laden Bills (Congress), or running war-time fiscal deficits ad nauseam (Treasury). 

Simply put, the consensus and overriding belief is that the bond market "simply cannot" keep selling off on the long end of the curve, meaning many view a kind of ceiling where rates will not go beyond. I take the other side of that view, and expect rates to shock a good many in 2025, using rates on the 10-Year Note as a decent standard. 

With the bond market continuing to move in the polar opposite direction since The Fed's cutting cycle commenced back in September, three months later I am more confident in declaring that the bond market is now revolting against the powers that be. It is in the early stages of doing so which is why so many are still assuming nothing has changed. 

But with today's oversold bounce attempt in equities, you will note rates on the 10-Year surging again, which suggests that yesterday may not have been such an overreaction in the VIX, as many declared it to be. 

In addition, as you can see on the IWM daily chart, ETF for the small caps in the Russell 2000 Index, below, higher rates are not helpful for the smalls. They broke below the election gap yesterday and then got rejected at it today trying to reclaim it (arrows).