Why Bonds Tell a Better Story Than Stocks

marketwatch.com,

Commentary: Stocks may rise, but bonds' outlook is far better

With U.S. stocks rising convincingly over the past month, fund managers and analysts making the rounds on business TV channels are again openly day-dreaming that retail investors, safely parked in bonds over the past two years, will finally come out to play.

Dream on.

Their PR exercise is based on the idea that stock market gains are telling a good story of things to come, which therefore would reduce the need for the safety of bonds.

Unfortunately, the bond market's generally been much more accurate than stocks at predicting economic trends.

The verdict is in: As the Dow Jones Industrial Average and S&P 500 gained about 7% in July, government bonds also gained and their yields, which move inversely to prices, fell. (more)