The US Treasury Bond Market Has Done What Stock Market Bulls Needed

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Going into September we knew that the Federal Reserve was going to lower interest rates.

We also knew that the biggest risk to the US financial markets is a sell off in Treasury bonds, even though we didn’t think it would happen.

Last year it did.

Last year, after the Federal Reserve lowered interest rates in September, long-term Treasury Bonds sold off, and their yields went up. This negated the impact of the lower Fed funds rates and actually caused mortgage interest for new loans to rise. It was a bad sign of debt woes causing trouble and that is a huge underlying long-term risk to the markets.

However, we were hopeful that this time bonds would not fall like they did last year, after this Septembers rate cut, and as you can see from the US 20-year Treasury Bond TLT ETF, this did not happen.