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Everyone’s talking about how the stock market has recently broken out to new highs. I’ve heard no mention, however, of the breakout in the long bond. In fact, this might be the most hated breakout I can remember.


What I find most fascinating is that even with this recent pullback, the long bond has absolutely crushed the stock market in terms of performance over the past year or so and it continues to be scorned while stocks continue to be loved!

We regularly see panicky headlines like this:

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…and this:

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The latest survey from BAML shows fund managers are still way overweight equities and way underweight bonds.

Screen Shot 2015-02-19 at 5.09.26 PMChart via Fat Pitch

Retail investors are also very bearish. Take a look at the top bond ETFs by assets and you’ll see that the two most popular funds are bearish funds. Between the two of them they have more assets than the top ten bullish funds combined.

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On a shorter sentiment time frame, DSI shows an incredible surge in bearish opinion of the long bond right now.

Do bull markets like this one ever end in this sort of fear and skepticism? Where’s the euphoria that typically marks the end of a bull market? Until we see it I’m still under the impression that if there’s an asset class that’s going to “blow off” it’s more likely to be bonds than stocks.