The Bearish Bond Narrative Fades

Bond

Summary:

Bond bearishness fades as yields stabilize, Michael Burry shuts down Scion while warning on tech earnings, and healthcare stocks surge—sparking speculation on which sector rotates higher next.

Not that long ago, bond yields were rising as concerns over deficits, inflation, and a series of bad Treasury auctions were paraded through the media. We bring this to your attention as the 10-year Treasury auction on Wednesday was on the weaker side, yet the bond market reaction was minimal.

Additionally, government deficits are just as problematic today as they were in May when the 30-year Treasury bond hit 5.15%. In May, when yields were peaking and bond market narratives, such as the bearish bond sentiment, were spreading fear of much higher yields, year-over-year CPI was 2.37%. Today it’s a touch over 3%.

Since May, bond yields have fallen by about half a percentage point, yet inflation has moved higher, and there doesn’t seem to be an end to excessive government spending. Furthermore, the Fed has been conducting QT, which drains liquidity and leaves the supply of Treasury bonds higher than it would otherwise be. What this tells us is that the bearish bond narrative has lost its steam. As we wrote in January:

Bond investor sentiment does impact yields and can be relatively accurately quantified, unlike the stock market. In bond market parlance sentiment is called the “term premium or discount.”Quantifying the term premium or discount and, equally important, understanding the market narratives responsible for the premium or discount is valuable.

With such knowledge, one can assess whether the narratives make sense. Thus, is the premium or discount likely to be sustained? If the narrative(s) are illogical, there could be an opportunity to profit when the premium or discount normalizes.

The graph below shows that the term premium (purple) has steadily declined, suggesting the narrative, particularly the bearish bond sentiment, is less impactful than it was.

The Big Short Shuts Down

Michael Burry, famed for predicting the 2008 housing/subprime crash and his likeness played a lead role in Michael Lewis’s book and movie The Big Short, is exiting his hedge fund, Scion Asset Management. Recently, he deregistered with the SEC and sent the letter below to his clients.

Scion only managed $155 million as of their last reporting date. While his hedge fund was small, his social media presence was significant. Recently, Burry has been pointing out that the depreciation periods some of Nvidia’s (NASDAQ:NVDA) clients are taking for their chips are much longer than the chips’ useful lives.

Doing so inflates earnings by decreasing expenses. Per Benzinga, he estimates that Oracle’s (NYSE:ORCL) profits could be overstated by 26.9% and Meta’s (NASDAQ:META) by 20.8%. Furthermore, he recently hinted at more details in a forthcoming disclosure on November 25 amid his broader bearish bets, including short positions on Nvidia and Palantir (NASDAQ:PLTR) and a discussion of bond issuance by Meta and Google (NASDAQ:GOOGL).

Healthcare Stocks Rebound: Which Sector Is Next?

For a good chunk of this year, healthcare stocks lagged the broader S&P 500. In fact, on July 22, we wrote a Commentary titled Will The Healthcare Sector Be The Next Rotation? In that article, we wrote:

As shown below, the P/E ratio of the healthcare sector compared to the S&P 500 is the lowest it has been in the last 30 years. Moreover, its absolute P/E is in the lower third of readings over the past 30 years. The sector is also very cheap and very oversold on a shorter-term technical basis.

The answer to our article is yes, healthcare stocks have recently rotated into favor. The table below shows the relative performance of each sector versus the S&P 500 over the last 10 days and in 90-day increments going back to late 2024. As shown, healthcare stocks have outperformed the market by 6.72% over the last 10 days.

Further, the graphic below the table shows that recent buying in healthcare has brought its absolute score to .90, which is a very overbought level. While the sector may consolidate on both relative and absolute terms, it still has significant room to catch up with the broader market. Compare the recent 10-day returns in the table to the prior three sets of 90-day returns for context.

Are the staples, financial, or energy sector next to follow the healthcare lead and play catch-up?

Source: investing

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Justin

Economic

When the White House makes a promise about distributing benefits to Americans, it's hard to remove politics from the equation, regardless of who is president. So when President Donald Trump recently promised a $2,000 "dividend" for most Americans, analysts and journalists immediately began parsing out exactly what that meant, and why he said it.

Although details are still sketchy, the $2,000 dividend could potentially affect your 2026 tax return in a number of different ways. Here's a look at exactly what the president said, how the dividend may play out and what it could mean for your taxes.

What's the Origin of the Dividend Promise?

Beginning on Nov. 9, President Trump made a series of posts on social media platform Truth Social regarding the dividend. Specifically, Trump declared, "People that are against Tariffs are FOOLS! We are now the Richest, Most Respected Country In the World, With Almost No Inflation, and A Record Stock Market Price. 401k's are Highest EVER … A dividend of at least $2000 a person (not including high income people!) will be paid to everyone."

What Are the Specifics?

While this might sound great on paper, Trump offered little by way of detail. As of Nov. 13, there still has been no clarification of who counts as "high income," which Americans would qualify for this "dividend," and how or when it would be paid.

Treasury Secretary Scott Bessent seemed to walk back the thought of distributing actual dividend checks when he told ABC News' "This Week" that "It could be just the tax decreases that we are seeing on the president's agenda. No tax on tips, no tax on overtime, no tax on Social Security, deductibility on auto loans. Those are substantial deductions that are being financed in the tax bill."

According to ABC News, on Nov. 12, White House press secretary Karoline Leavitt told reporters at the White House, "The president made it clear he wants to make it happen. So his team of economic advisers are looking into it."

Put it all together, and as of Nov. 13, it's not at all clear how or even if the $2,000 dividend will come about.

Does the Math Work Out?

According a post from Erica York, vice president of federal tax policy at the Tax Foundation, handing out $2,000 cash to the bulk of the U.S. population could cost $300 billion or more — an amount that would exceed the net revenue brought in so far from Trump's new tariffs. And it's entirely possible that the tariffs could go away, or even be retroactively deemed illegal, by the Supreme Court of the United States, according to AP News.

This is likely the reason Bessent sidestepped the idea of actual dividend checks going to Americans. If the $2,000 is cloaked in other deductions or tax breaks as he suggested, the administration could likely sidestep cash payouts.

Assuming It Passes, What Could It Mean for Your Taxes?

If everything falls into place and Americans actually receive some form of $2,000 dividend, here are some of the ways it could play out for your taxes.

If paid in the form of a "stimulus check," like the ones issued during the pandemic, they will likely be nontaxable. This means your tax liability will not increase, and the money paid to you will not push you into a higher tax bracket.
If issued as a tax credit, it will reduce your tax liability by the amount of the payout, potentially $2,000. If you don't owe $2,000 in taxes, any excess amount would come in the form of a tax refund. This amount would also be nontaxable.
If used as some type of deduction or exemption from taxes, whatever benefit you receive would also be nontaxable. For example, if the $2,000 comes in the form of an exemption from auto loan interest, it simply means you won't have to pay as much on your car loan.

Overall, President Trump's offer of a $2,000 dividend to low- and middle-income Americans certainly sounds attractive on the surface. But as of mid-November, there's still no real clarity on where the money will come from, who it will go to or whether it will actually happen. The best course of action right now is to keep an eye on the news to see when — or if — the policy is actually implemented.

Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.

Source: Yahoo Finance

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Samantha Luan

Political

Commodity

Canada plans to buy stakes in projects that will produce and process key minerals, the country's natural resources minister said, as part of a broader effort to secure supplies of materials that are controlled by China.

Tim Hodgson said the government has already started studying projects that will receive these equity investments, including mining operations and processing facilities. Those entities would be "deemed in the national interest, but for some reason they aren't able to find the equity," he said in an interview with Bloomberg News.

"For example, some of the rare-earths processing facilities that are being talked about — unless they receive equity-like support, given the stranglehold that certain countries have on those markets, they're unlikely to happen."

Critical minerals like lithium and graphite, along with rare earth metals like terbium and dysprosium, are essential to motor engines, consumer electronics and weapons manufacturing. But the bulk of the mining and processing of these materials is controlled by China.

It's an unusual move for the Canadian government to make equity investments, but it follows the Trump administration's decision to buy stakes in miners including MP Materials Corp., Lithium Americas Corp. and Trilogy Metals Inc. this year to expand production of rare earth minerals and other metals on domestic soil. The latter two of those companies are headquartered in Canadian mining hub of Vancouver.

Canada has unveiled a suite of measures to shore up access to critical minerals, including fast-tracking mining projects deemed to have national importance. The government said Thursday it will try to accelerate the approval of projects including the Nouveau Monde Graphite Inc. phase 2 project in Quebec, Canada Nickel Co.'s Crawford project in Ontario and a tungsten and molybdenum mine in New Brunswick.

Shares of Nouveau Monde jumped nearly 12% on Wednesday after a report of the government's plan, while Canada Nickel has surged 48% this week.

Prime Minister Mark Carney's government also introduced a C$2 billion ($1.4 billion) "critical minerals sovereign fund" in its latest budget that will provide the money for equity investments, loan guarantees and offtake agreements to support mining projects. Hodgson said the Canada Growth Fund, a separate investment vehicle, has started studying projects eligible for equity investments.

The minister said the government will look to expand stockpiling of minerals to support producers of niche metals dominated by China. Canada has already begun stockpiling scandium and graphite, he said, and is now looking at other minerals. Group of Seven allies last month announced measures aimed at securing mineral supplies outside of China.

"We're doing a whole mapping exercise, looking at what Canada's needs are relative to what Canada's production and sourcing capability is," Hodgson said. "Where we see a significant deficit, we will absolutely look at stockpiling as a way to protect Canadian industries and the economy."

Source: Bloomberg Europe

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Adam

Forex

The Swiss franc climbed to a 10-year high against the euro as expectations of stickier inflation and the prospect of lower US tariffs bolstered demand for the haven currency.

The franc rose 0.4% to 0.91862 per euro, its strongest level since January 2015 when the Swiss National Bank ended the 1.20 exchange rate cap. It’s on track for a seventh daily gain, the longest winning streak since August 2024.

The currency’s advance follows comments from SNB Vice President Antoine Martin who said this week that inflation “is expected to rise slightly in the coming quarters,” dampening speculation of a return to negative rates. Money markets now assign less than a 30% probability of the sub-zero policy over the next year, down from about 64% a month ago.

Separately, reports that Switzerland is close to securing a reduced 15% tariff on exports to the US gave the Swiss currency an additional boost. The franc also benefited from the flight to safety on Friday as global equities retreated.

Swiss Franc Surges to Decade High on Stickier Inflation Outlook_1

Hedge funds are positioning for further franc strength, particularly against the euro and the yen, even as officials may grow uncomfortable with the pace of appreciation, according to European traders familiar with the transactions, who asked not to be identified because they aren’t authorized to speak publicly.

Long positions against the greenback are also on the table as December is historically the strongest month for the Swiss franc.

Source: Bloomberg

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Michelle

Stocks

Economic

The correction in the US Tech index has intensified. The US Tech forecast for the upcoming week is negative.

US Tech forecast: key trading points

Recent data: US ISM services PMI for October stood at 52.4
Market impact: the data has a positive effect on the technology sector

US Tech fundamental analysis

The US ISM non-manufacturing PMI came in at 52.4, above the forecast of 50.7 and the previous reading of 50.0. This indicates that the services sector not only remains in expansion territory (readings above 50.0 signal growth) but is also accelerating compared with the previous month, beating analysts' expectations. As services represent the largest part of the US economy, the data indicates stable domestic demand and suggests that businesses are more confident than anticipated.

On the other hand, stronger employment metrics compared with consensus forecasts raise concerns that the disinflation process might proceed more slowly than desired by the Federal Reserve. For the Fed, this is a signal for caution when considering further rate cuts. For the US stock market, the overall impact tends to be positive. Stronger service sector activity suggests potential revenue and profit growth for companies focused on domestic consumption – retail, transport, hospitality, restaurants, and financial services. At the same time, recession fears are reduced: since services usually weaken before an economic downturn, the rebound above stagnation levels indicates a resilient economy.

US Tech technical analysis

For the US Tech index, the effect is moderately positive. A robust services sector supports demand for digital infrastructure, cloud computing, software, online advertising, and e-commerce. Many tech companies derive a significant portion of their income from corporate and consumer services. When services in the economy are growing, IT budgets are cut less frequently, and in some segments, they are even expanded. This strengthens expectations for tech companies' revenue and profits and, in theory, should support the US Tech index.

US Tech technical analysis for 14 November 2025

The US Tech index continues to decline within its ongoing correction, while the broader uptrend remains intact. The nearest resistance level is located at 26,245.0, and a new support zone has formed around 24,655.0. The next potential upside target is 26,910.0.

The US Tech price forecast outlines the following scenarios:

Pessimistic US Tech scenario: a breakout below the 24,655.0 support level could push the index down to 23,980.0
Optimistic US Tech scenario: a breakout above the 26,245.0 resistance level could boost the index to 26,910.0

Summary

The expected increase in tech-sector revenues and demand may partly offset the pressure from higher or prolonged interest rates. In the medium term, the direction of the US Tech index will depend on what investors consider more important: the sustained business growth of tech companies or the potential persistence of high borrowing costs and bond yields. From a technical perspective, the next upside target for the US Tech index could be 26,910.0.

Source: RoboForex

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Adam

Stocks

Economic

British government bond yields rose sharply on Friday following reports Finance Minister Rachel Reeves is no longer planning to raise income tax rates in the Autumn Budget later this month.

The yield on the benchmark 10-year gilt initially rose around 13 basis points in early trade, but was last around 7 basis points higher at 4.51%. Yields on the long term 20- and 30-year gilts were last seen 8.5 and 9 basis points higher, respectively. Yields and prices move inversely to one another.

The moves came as investors reacted to a report from the Financial Times of an income tax U-turn. The Treasury was not immediately available to comment when contacted by CNBC on Friday morning.

U.K. stocks were also lower. The FTSE 100 index shed over 1% in morning trade, with Lloyds, Natwest, and Barclays banks occupying the bottom of the index, each losing more than 2.7%.

Reeves had spent the past week apparently laying the groundwork for a manifesto-breaking rise in income tax, which split Labour party lawmakers and led to further turmoil in the already embattled party, whose leader Prime Minister Keir Starmer has dismal approval ratings.

A proposed 2p national income increase was to be offset by a 2p reduction in national insurance, designed to hit passive income streams rather than working people. There are now expectations, however, that the £30 billion ($39.5 billion) hole in the government’s budget will be filled by a patchwork of smaller rises.

It could be a “fiscal reckoning” as a patchwork approach will put pressure on the gilt market, Wren Sterling’s investment chief Rory McPherson told CNBC’s “Squawk Box Europe” on Friday.

“Within the U.K., if we have more of the smaller taxes being targeted as part of the programme from Rachel Reeves, I think that’s going to put more pressure on the government, more pressure on them to go back to the bond markets and ask for more money, which in turn puts more pressure up on yields,” McPherson said.

He added that there has been a “big march down” in yields but now “we’re pulling away that that.”

Volatility this year has left long-term borrowing costs hovering at their highest level since the late 1990s, with U.K. debt having the heftiest price tag in the G7.

For Toni Meadows, head of investment at BRI Wealth Management, the government has found itself “between a rock and a hard place with regard to this budget.”

“They inherited a bad fiscal position but then made the situation worse with public sector pay awards. The reason that there has been so much speculation regarding this budget, more than any statement in recent history, is because everything they need to do is going to be unpopular. How can this statement simultaneously promote growth whilst having to cut spending and increase the tax burden to keep bond investors happy?” he said, noting that outstanding debt and service costs add pressure.

While the market is pessimistic, “the uncertainty of not knowing the exact detail is more damaging in the short term,” Meadows said, adding that detailed plans are required for investors to be able to move beyond speculation.

Julian Howard, chief multi-asset investment strategist at GAM Investments, suggested that “onerous restrictions” on pensions savings, ISAs, an expatriation exit charge, and capital gains and council tax changes could be on the cards.

“The Chancellor will doubtless inflict enough misery later this month to fix the immediate problem but the emerging challenge the markets are hinting at may now be one of more general economic credibility,” he said.

Wren Sterling’s McPherson added that the Bank of England will still be able to make an interest rate cut after the budget, if it wants to. Other investors appear to have curbed their optimism, with bets on cuts shedding six basis points compared with Thursday, according to data compiled by LSEG.

The Autumn Budget is expected on Nov. 26.

Source: cnbc

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Glendon

Forex

Economic

The US and Switzerland have "essentially" reached a trade agreement to lower tariffs on Swiss goods to 15% and the White House plans to reveal details on Friday, US Trade Representative Jamieson Greer said.

"Switzerland is probably the next one," Greer said on CNBC, one day after meeting with a Swiss delegation in Washington. "We've essentially reached a deal with Switzerland. So we'll post details of that today on the White House website."

Greer told reporters that the duty on products from Switzerland would fall from 39% to 15% and that the European country has committed to investing $200 billion in the US.

Greer said that Switzerland is "going to send a lot of manufacturing here to the United States, pharmaceuticals, gold smelting, railway equipment. So we're really excited about that deal and what it means for American manufacturing."

Switzerland has also committed to buying more Boeing Co. planes, Greer told reporters.