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“It’s not what you look at that matters, it’s what you see.” – Henry David Thoreau
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It’s another weak morning for US equity futures as the backdrop of higher rates and oil prices weigh on sentiment. Futures are lower across the board, but not by a large amount. The key report of the day will be ISM Services at 10 AM. Plus, there are a number of conferences today, so be on the look out for individual company news throughout the day.
176 years ago today, Henry David Thoreau moved in with Ralph Waldo Emerson and his family after living in a woodshed on Walden Pond for two years. Two years in a shack is a long time, but bonds have been out behind, or maybe more accurately, in front of the woodshed for even longer. As measured by the Bank of America 10+ Year US Treasury Index, August was the 31st straight month that the year/year total return for US Treasuries was negative, easily surpassing the 15th month streak than ended in December 1980. Not only has the y/y change in long-term Treasuries been negative for more than two and a half years, but the y/y change has also lagged the y/y total return of the S&P 500 for 34 straight months.
Since 1979, there have only been two other periods where the 10-year underperformed the S&P 500 on a y/y basis for more months. The most recent ended in July 1998 at 33 months while there was a 35-month streak ending in October 1981. Given the way the numbers work out, unless treasuries stage a monster rally and/or stocks take a sharp leg lower this month, it’s almost a guarantee that the current streak will at least tie, if not exceed, the 35-month streak from 1981. In at least the last forty years, there hasn’t been a worse time to be creditor of Uncle Sam.
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