As the new year approaches, investor sentiment towards the bond market is increasingly negative.

This month, traders withdrew $5.3 billion from Blackrock's$iShares 20+ Year Treasury Bond ETF (TLT.US)$fund, with the monthly outflow expected to reach the highest level in the 22-year history of this Fund. This is the largest long-term Treasury Bond ETF in the USA.

Rosenberg Research indicates that these outflows may be a sign of future troubles, as investor confidence in long-term bonds is weakening. Meanwhile, Treasury yields in the USA surged this month, with the bond market repricing based on the Federal Reserve's outlook for future reductions in rate cuts.

The company's founder, David Rosenberg, wrote in a report on Monday: "The sentiment in the bond market couldn't be worse than it currently is."

As investor confidence in Bonds deteriorates, the stock market sentiment continues to rise. Wall Street forecasters generally expect 2025 to be another bumper year,$S&P 500 Index (.SPX.US)$(S&P 500 Index) After consecutive years of over 20% growth, the average increase is expected to be around 10% next year.

Companies like Oppenheimer and Wells Fargo & Co have the most bullish targets, anticipating that the index will rise more than 17% in 2025.

Rosenberg stated that in light of the soaring bullish sentiment in the stock market, the bond market's performance before the new year may serve as a cautionary counter signal.

Rosenberg added that the weakening sentiment in the bond market is a result of the Federal Reserve's hawkish comments and expectations regarding President-elect Trump's trade and fiscal policies.

Earlier this month, the Federal Reserve lowered interest rates by 25 basis points, marking the third consecutive rate cut this year, but it downgraded the outlook for further cuts in 2025.

Federal Reserve Chair Powell stated that the Fed has the ability to act more cautiously in future decisions and emphasized the risks of drawbacks in progress to reduce sticky inflation.

Rosenberg remarked that, as a result, bond investors now expect the Fed to only cut rates one to two more times in 2025, compared to previous expectations of at least four times.

"Powell and his team have scared off the bulls, at least for now," he wrote.

Meanwhile, Rosenberg indicated that Trump's proposal to impose comprehensive tariffs on major trading partners such as China and Canada, coupled with the crackdown on immigration, has also brought inflation risks that frightened investors, causing them to avoid extending duration.

Editor/Rocky