What Would Scare the Bond Market and Cause Outflows to Increase?

February 5th, 2013

by Chris Kimble

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Government bond funds have been experiencing outflows of late.

Copper is pushing above resistance and the CRX (Commodity) index is up against falling resistance. If Copper keeps pushing higher and Commodities (CRX) breaks out, the yield on the 30-year bond should continue to increase and odds are high this will scare government bond owners into thinking growth or inflation is at hand.

A breakout in the CRX & Copper should lead to increased outflows in the government bond market, resulting in lower bond prices.

When it comes to portfolio construction the breakout in yields (5, 10 & 30 year) are all suggestion a lower allocation towards government bonds.

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