Investors have made a strong comeback to the markets as during the last month, Nasdaq leads the returns while the US treasuries have also attracted buying interest, with the yield of the 20-year bonds being 4.15%. Regarding the possibility of emerging buying interest in US government bonds, we had made a relevant reference in a recent investment research, in which we had pointed out the strong buying interest expressed by large investment banks.
If the markets are returning to normal, a situation that “desires” stocks and bonds to move in the same direction, especially after Jerome Powell assured that bond purchases would continue, then in the next period of time we could experience a sharp rise of the bond market.
US bonds have a strong positive correlation with gold and in the past the gold movement preceded a similar bond movement. In this sense, it is interesting to note that over the last few weeks, gold has shown a gradual decline in capital outflows. This has resulted in a stabilization effort which in the short term has led to an upward movement that raises hopes for a more serious upturn. Gold displays other interesting data such as that it has had a statistically very bad first quarter.
Gold’s momentum could lead to relatively safe conclusions about how intensely bonds (20 years) would react. The following graph is typical.
Nasdaq: Can 2021 be another exceptional year?
After a difficult start and with major technology stocks being at significantly lower levels, the technology index is recovering again. The trajectory of the Nasdaq so far has many similarities with both 1999-2000 and 2009. During the period 1999-2000 the year ended with the well-known investment mania, while 2009 was a powerful beginning after the 2008 crisis. Our view leans towards the scenario of 2009, although we will constantly monitor this ratio.