As the chart below shows, prices have broken out decisively through record volume, and returned to the breakout level to find support.
The weekly charts are clearer still. Here is a market that's made a double bottom, pushed up to resistance, found record volume, and pushed to new highs for the move.
It's time to add long-term fixed rate assets to the portfolio.
Gold prices are tamed, as the chart below shows. Inflation is no longer a worry.
TACTICS
Continue money market arbitrage. This will continue to be a money maker for at least another six months.
Begin adding long-term fixed rate assets with shorter-term liabilities.
Stop lengthening liability maturities.
STRATEGY
Inform senior management that the bear market in bonds is over.
The next Fed move will be to lower interest rates.
Be prepared for a long bull market in bonds: several years at least.
Reduce hedging programs, but continue to take advantage of yield spikes like the current one. They will come again, and are an excellent opportunity to add high-yielding assets.
