Bond Market Reaches a Crossroad. Here's What to Do.

The bond market is at a crossroads. The charts are signaling that the 2.32 percent yield on the benchmark 10-year Treasury note marks a major line of support/resistance. The bond mavens just can’t quite seem to decide where we are now heading now. In my view, it all depends on what you are looking at these days.

Last month, when the yield was hovering around 2.60 percent, it seemed as if every Tom, Dick and Harry -- with a very few exceptions, including me -- was calling for a 3 percent yield by now. Well, that didn’t happen, and now I sense a good deal of confusion at many major money managers. President Donald Trump is extolling huge tax cuts and equities have skyrocketed as a result, but the bond markets have decoupled from the stock market’s enthusiasm. We seem to have arrived at the dreaded “very difficult moment.”