Over the past few days, the narration around Bonds has really caught on. With bond yields across the globe recovering sharply from lows, there are a lot of questions about the current stock market rally, the impact of bonds on the bull-run, whether we should prepare for a sell-off etc.

Let's try and address some concerns through this post where we talk about the impact of bonds and the US dollar on the ongoing stock market rally.

Let's assume we know nothing about the correlations in the market and are basing our view on the simple activity of observing the historical price action and its subsequent impact.

Here we have India's 10-year Government Bond. When we look at the extremes of the movement, which comprises of the high and low clocked in the 2008 crash, the range lies between 9.30-5.25. Since then for 12 years, the range hasn't been breached and if this was any other chart with the name stricken out, one would say it's going sideways.

In the chart below, we have highlighted three instances where the bond yield has bottomed out and rallied. This has happened in 2009 and 2017 in the past. Can we expect the same in 2021?

Whenever I want to talk about bonds, I always know just who to call. Larry McDonald is a former bond trader at Lehman Brothers and author of the book, Colossal Failure of Common Sense. I highly encourage you to give it a read, especially if you're looking for some perspective on what really happened back in 2007-2008.

It's no coincidence that I reached out to him to come on the podcast. Larry and I had a very timely conversation in February of last year. So with the bond market recently losing 5-6 Trillion dollars in such a short period of time, who better to talk to than by favorite bond trader.

From the desk of Steve Strazza @sstrazza

At the beginning of each week, we publish performance tables for a variety of different asset classes and categories, along with commentary on each.

Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.

Every major asset class on Earth continues to illustrate risk-taking behavior on the part of market participants.

Yields, Oil, Equities, Base Metals, the Australian Dollar -- there's an overwhelming amount of new highs in offensive areas of the market right now. The weight of the evidence continues to suggest that we want to be buyers, not sellers, of stocks.

This is the video recording of the February 2021 Conference Call.

From the desk of Steve Strazza @sstrazza

At the beginning of each week, we publish performance tables for a variety of different asset classes and categories along with commentary on each.

Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.

We continue to harp on the risk-on themes that support our bullish macro thesis.

Rotation down the market-cap scale, commodity strength, and defensive alternatives making new relative lows have been some major themes we continue to see play out.

From the desk of Steve Strazza @sstrazza

At the beginning of each week, we publish performance tables for a variety of different asset classes and categories along with commentary on each.

Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.

In last week's report, we played "devil's advocate" and laid out some of the more bearish developments we could find out there.

But all-in-all, the market is still providing bears less room to make a sound argument. We continue to find that any bearish evidence is primarily isolated to shorter timeframes... and even then, still overwhelmed by the abundance of bullish data points.

Stocks and commodities have been the best place to be in. We've been saying this for a long time now. The other thing we've been saying is that Currency has been a downer in the last few months. Anyone who's been trading in currency would be better off investing in a different asset class!

Does the same view hold true going forward? Let's find out.

From the desk of Steve Strazza @sstrazza and Grant Hawkridge @granthawkridge

They say the Bond Market is where the smart money is. Maybe it is. I have no idea.

What I do know is that it's where a lot of the smart information is.

Due to the diversity among credit instruments, there is a swath of unique data that we can use not just for Bond prices and Interest Rates but also to glean insight into other asset classes.

I'm talking about things like TIPS for inflation expectations and Emerging Market or High Yield Bonds to analyze risk-appetite for other assets such as the stock market.

Alpha has been in Equities and risk-assets for a while now. As such, we haven't needed to discuss bonds from a portfolio perspective... but that doesn't mean we aren't paying close attention to these assets.

The Bond Market is overflowing with information. We'd be foolish to neglect it.

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

At the beginning of each week, we publish performance tables for a variety of different asset classes and categories along with commentary on each.

Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.

As we discussed in our latest report, bears are running out of any substantial fuel to support their position.

And despite the arrival of some long-awaited selling pressure last week, that absolutely remains the case.

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

The market is giving us absolutely no reason to play defense right now.

Regardless of the asset class, it's the risk-takers that are having their way in this environment.

Investors stretching out along the risk spectrum is a point we've been hammering home for some time now, particularly in our weekly RPP Reports - like this one.

Not only is this true on absolute terms, but we're also witnessing cross-asset relationships progress higher and in favor of risk-asset which can only be taken as a positive.

It's not often we see all asset classes in agreement with each other, but when we do, it's a significant driving force that supports the risk-on trade and suggests higher prices to come.

This week on the podcast, Jonathan Krinsky joins me for a chat about Sector Rotation. While the Mega-cap names like Apple, Google, Facebook, Amazon and Microsoft grinded sideways, or even down, since August, the Small-caps, Mid-caps and Micro-cap names have been the leaders. What happens if the Mega-caps break out of these bases to new all-time highs? Does the sector rotation continue? Or do we then rotate into the more defensive areas like Staples, Utilities and REITs, which currently keep making new relative lows?

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

At the beginning of each week, we publish performance tables for a variety of different asset classes and categories along with commentary on each.

Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching in order to profit in the weeks and months ahead.

As we discussed in last week's report, bears have a lot of work cut out for them.

With all this rotation into offensive groups and cyclical areas of the market, they are really running out of talking points. We literally can't find a meaningful group of stocks in the US or even abroad that we would want to short at this point.

This is excellent information as it's not something we can say very often... and it's bullish, just to be clear.