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Weekly Market Pulse - The Message Of The Market

Joseph Calhoun profile picture
Joseph Calhoun


  • Bonds were selling off, stocks were selling off, commodities were rallying.
  • What really happened last week was the market's real growth expectations improved.
  • What investors should have learned last week is that diversification does indeed work and it works when you need it most.

I was told many years ago when I started in this business that it wasn't my job to predict the future. Our job as investors is to properly and accurately interpret the present. I was also told that wasn't as easy as it sounded and the current consensus about the state of the world was probably, almost certainly, almost always, wrong. Last week I thought about that as I listened to guest after guest, talking head after talking head tell me that the bond market was selling off on inflation fears. Or that the dreaded bond vigilantes had finally made a comeback, Treasuries going wanting at the 7-year auction as the House of Representatives prepared to pass President Biden's $1.9 trillion COVID relief (mostly) bill.

It was a neat narrative that explained so much. Bonds were selling off, stocks were selling off, commodities were rallying. It was like the return of the '70s all in one week. The only real problem with it was that, well, it wasn't true. The market was sending out a message to investors, the financial press, financial Twitter and it was like they were all standing around with their fingers in their ears going "La, la, la, la, la", I can't hear you.

It is true that bonds sold off last week. On Thursday, the 10-year Treasury yield at one point was up 18 basis points from its low. That might not seem like much but when the rate starts the day at 1.45%, it's a pretty big move. The sell-off accelerated after the 7-year Treasury auction, the results of which showed a distinct lack of enthusiasm on the part of buyers. But to ascribe those moves to a rising fear of inflation required that one ignore a bunch of other markets.

What was more

This article was written by

Joseph Calhoun profile picture
Joe has worked in the financial services industry since 1992 in various capacities, including Operations Manager, Compliance Manager, Registered Representative and Portfolio Manager. From 1997 to 2006, when he founded Alhambra Investment Management, Mr. Calhoun was a Director of Investments at Oppenheimer & Co. Mr. Calhoun holds the Series 63 (Uniform Securities Agent State Law) and 65 (Uniform Investment Advisor Law) securities licenses. He has previously taken and passed the Series 7 (General Securities Representative) and Series 9/10 (General Securities Sales Supervisor) securities exams. Joe proudly served in the U.S. Navy’s nuclear submarine service for 8 years (1983-1990) and was awarded several commendations including the Navy Achievement Medal in 1987. He studied engineering at the University of South Carolina and is a graduate of the U.S. Navy’s Nuclear Propulsion School. He founded Alhambra Investment Management as a registered investment advisory to address the needs of the individual investor. His market commentaries are widely read and published at various online outlets. He has appeared on Larry Kudlow’s program on CNBC and various radio programs. He is also an editor of the website RealClearMarkets.com.

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Comments (4)

Is the Bond Market telling us reflexivity or is the devil in the details of March Government Data ?
SPX will cross 4000 very soon, tighten seat belt !
Joe: Thanks always great and concise info.
CashFlow13 profile picture
Good run down on everything. The one commodity that was not UP last week was gold.
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