4 Year Presidential Cycle: Bond edition

Wednesday, July 05, 2006 | 07:54 AM

Last week, we looked at the 4 Year Presidential Cycle and equities, via Birinyi Associates. Today, we take a look at similar data as it applies to fixed income instruments:

"With so many investors concerned over interest rates, we wondered if they follow cyclical tendencies as well. The chart to the lower right plots the YTD percent change in the ten-year bond yield vs the average YTD change in ten-year yields during the second year of a presidential term. Like the chart for the S&P 500, this year is following a similar pattern to the average, although the magnitude of the move this year is considerably greater than the average move. This would imply that bond yields are near their peak for the year."

If the cycle holds true this year, bond yields should be heading lower in the second half, with allthat implies . . .

10 year bond change, 4 year cycle

10_year_bond_change_4_year_cycle

Source: Birinyi Associates, Inc.



Avg_change_10year_chart


Wednesday, July 05, 2006 | 07:54 AM | Permalink | Comments (6) | TrackBack (0)
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Comments

Sorry but this chart is worthless - the table shows the returns are all over the board. On average yield go up the first half of the year - they either had to go up or down. This year they have went up - it was 50/50 if they went the same way as the average. The scale on the left and right are so different as well.

Posted by: jab | Jul 5, 2006 8:14:22 AM

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