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Bond/Stock Ratio Still Rising

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Last Saturday's message showed that Treasury bonds have been doing better than stocks since the summer. That's still the case. This chart below shows a ratio of the the long-dated Treasury ETF (TLT) divided by the S&P 500 SPDRs (SPY). The rising ratio shows Treasury bonds outperforming stocks during December. The chart also shows that long-dated Treasuries have done better than stocks since mid-year. Part of the reason for the bond buying is growing fear of global deflation, which usually favors bonds over stocks. Treasury yields are also higher than other developed markets, which makes U.S. long-dated bonds more attractive to foreign buyers. A stronger dollar also makes U.S bonds more attractive to foreigners.

Merry Christmas and Happy Holidays everyone!  See you in 2016.
- John

 

John Murphy
About the author: is the Chief Technical Analyst at StockCharts.com, a renowned author in the investment field and a former technical analyst for CNBC, and is considered the father of inter-market technical analysis. With over 40 years of market experience, he is the author of numerous popular works including “Technical Analysis of the Financial Markets” and “Trading with Intermarket Analysis”. Before joining StockCharts, John was the technical analyst for CNBC-TV for seven years on the popular show Tech Talk, and has authored three best-selling books on the subject: Technical Analysis of the Financial Markets, Trading with Intermarket Analysis and The Visual Investor. Learn More
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