"Well, you know this is a bull market [in government bonds]!"

The action in the US government bond market over the last several weeks has reminded us of a quote from one of our favorite books on investing, "Reminiscences of a Stock Operator". Those familiar with Reminiscences will recall several scenes in which young traders are gathered at a brokerage house exchanging ideas and contemplating every tick on the tape as if it marked some monumental episode for owners of the stock. Then one of the young traders would ask a quiet veteran trader who was sitting in the corner, paying little or no attention the topic du jour, what he thought of the recent price action of some issue, to which the veteran would reply, “Well, you know this is a bull market”.

Needless to say, we feel a sense of deja vu when considering the yield action in the bond market in recent weeks. In Feburary bonds sold off massively and yields had an epic rise in the course of a month. At the time we commented that the selloff in bonds was among the largest going back to the early 1980s and that a snapback, and resumption of trend, was likely. Simultaneously, we heard nothing but how yields had just put in the low and a bear market in bonds had started. 

Since then yields have fallen back on cue, but as recently as yesterday we were reading how the minuscule move up in yields between March 24th and March 26th was evidence that the trend in yields is now higher. Allow us to disagree and remind readers that after all, "this is a bull market" in bonds.