Trump Election the Deathknell for Bonds

• Posted by Greg Harmon
• on November 11th, 2016

Election night brought out a string of surprises. Polls were suggesting a Clinton victory was in the bag. Stock markets had halted their slide and were slowly starting higher. Stability looked to be the word to describe the environment. And then returns started coming and it all changed. Stocks plummeted in the overnight futures market as word spread that Trump might actually win.

By the time the night was over the stock market had hit limit down levels and bounced back significantly and the man with the orange hair had been elected president. The markets rebounded swiftly Wednesday recovering all of the loss and adding a gain. And that continued later in the week. But for one market the election seems to have been the deathknell.

The Treasury market had already been moving lower off of highs made in July. The direction was there. But the commitment to a sell off was not complete prior to the election. But Wednesday saw a nearly 4% move lower in bond prices. And it continued Thursday. As I write this Friday morning there is still no bounce in this market. Nobody took profits into the weekend after the biggest drop in years, maybe ever? That smells of a real commitment to trend change. Stay tuned.

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