The $AGG(Barclays Aggregate Bond Index)is trading just below very heavy supply this week. On Nov. 1st the index ended a four week consolidation(bear flag)with a downside break. They may very well be in the early stage of a new leg lower(higher rates). A drop back into oversold territory, similar to the conditions in late February, would drive the $AGG quite a bit lower. It certainly looks like the $AGG Index is headed for its worst year in history:
Overall the stock market has weathered the interest rate storm extremely well. Could it continue? Certainly, but if this steady move higher in rates begins to accelerate a big rotation out of equities could begin.
At time of publication we do not have a position in $AGG.
Hat tip Charlie Bilello