Bond prices are on the rise this week after the Federal Reserve again sounded a dovish call. They could keep rising, says Todd Gordon of TradingAnalysis.com.
div > div.group > p:first-child"> The 10-year yield declined to its lowest level in 15 months on Thursday, a day after the central bank suggested it would not hike rates in 2019 in response to signs of slowing economic growth. Bond prices, which move inversely to yields, typically rise in response to expectations of weaker growth as investors flock to low-risk assets.
The Fed said it would reduce the amount it rolls off its billion-dollar balance sheet in May and then end the program in September. Since October 2017, it had paired balance-sheet reduction with rate hikes to tighten monetary conditions."That, in theory, is supposed to force savers into the stock market, buy more stocks, push stock prices higher, but one thing I think it will also do is push bonds higher, if there's not more supply coming to market," he said.
"Shorts don't have the power to push to new lows, so if shorts are falling behind, buyers are growing more aggressive, they should be able to punch us out of that resistance zone," he said.
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