Market Minute 9-3-25- "Bonds OUT, Gold IN" is The New Thing

Stocks slumped as bonds got dumped yesterday. But gold and silver surged again, with the former hitting a record high. We’re seeing a similar – though more muted – dynamic today. Crude oil and the dollar are modestly lower.

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Out of bonds, into gold. That seems to be the trade this week…and really, for the last several months. This week alone, 30-year bond yields in the UK hit the highest since 1998 while yields on 20-year Japanese notes hit the highest since Y2K. The 30-year came within a whisker of breaching 5% to the upside here in the US, too.

What’s behind the global bond market rout? Governments are buried in debt and either unable or unwilling to implement policies that would fix the problem. Progress on the inflation front has slowed amid rising tariffs and higher input costs.chart

Source: Bloomberg

Meanwhile, Investors have been rattled by threats to central bank independence. That’s particularly true here in the US where President Trump is trying to stack the Federal Reserve with friendly policymakers. Plus, more institutional managers are abandoning the “60/40” portfolio model (60% stocks, 40% bonds). They’re turning to models that incorporate alternative and hard assets instead – including precious metals like gold.

See also:INTA: A Back Office Software Play for this Strong Market

In antitrust news, Alphabet Inc. (GOOGL) caught a break when a US district court judge avoided slapping the Big Tech firm with the harshest penalties he could have chosen. Judge Amit P. Mehta ruled last year that Google had a search monopoly, but didn’t force the company to sell its Chrome browser business in this week's remedy ruling. Google also won’t have to abandon certain distribution payments and procedures, a boon to it and its partner Apple Inc. (AAPL). GOOGL and AAPL shares rose in response.

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