According to Mark Hulbert at bond market timers are as bearish as they have ever been on long term bonds.

Consider the latest readings from the Hulbert Bond Newsletter Sentiment Index (HBNSI), which reflects the average exposure to the bond market among a subset of short-term bond timing newsletters. As of Thursday night’s close, the HBNSI stood at minus 67.4%.

That means that the average of the timers included in this sentiment index is recommending that two-thirds of the amount subscribers have allocated to the fixed income market should be invested on the short side of the bond market. That’s an aggressive bet that the bond market will decline, and that interest rates will rise.

Contrarians believe that the markets rarely accommodate the majority, so this extreme bearishness is bullish.

Even if you are bearish on long term bonds, it may be wise to heed this extreme in sentiment. The bond market could be due for a pause. A word of caution, another measure of bond market sentiment produced by has not reached a bearish extreme.

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