What do folks think about the divergence in equity and bond market signals? Are you bullish or cautious in this rising rate environment?

Brackets may be broken (thanks a lot, Saint Peter’s), but symphonies keep chugging along.

Stocks rose for a second straight week, while bond prices fell as yields increased. The 10-year US treasury finished the week at 2.49%, up from 1.51% at the end of 2021.

Volatility showed up in oil and bonds. Oil rose to finish the week at $113 a barrel, but in recent weeks it has traded below $100 and above $130. In bonds, the 10-year rose 30 basis points and IEF (-2.7%) was the worst-performing benchmark ETF. Last week’s volatility, measured by standard deviation, for IEF (~12%) was more than double the level for the past year (~6%).

Another positive week for equities strengthened Risk On signals. The S&P 500 is above its 200-day moving average, and the large-cap index is outperforming bonds YTD. In addition, volatility for the S&P 500 was muted (17.5%). Bond market signals remain cautious with higher volatility and short-term treasuries (SHY) outperforming the aggregate market (BND).