Still No Bottom In Treasuries

The ten year yield has moved up to 4% and there are few signs of a bottom in sight. Sentiment towards treasuries is not terribly bearish, as investors are too bullish on stocks to care about treasuries. In previous instances during the past year where bonds threatened to break down, short treasury recommendations were abundant and treasuries proceeded to rally strongly. Now that treasuries have actually broken down I am hearing few short recommendations.

The move lower in treasuries is only a couple of weeks old and the move move is not exhausted or extended in terms of time. Higher yields are yet another warning sign that investors are blissfully ignoring as the fear of losing money has morphed into the fear of not being able to keep up with the Dow Joneses.

2 comments:

Anonymous said...

http://www.bespokeinvest.com/thinkbig/2010/4/6/42-days-and-counting.html

penguin said...

Treasuries might continue to drift down for a while while stocks drift up, but both trends will reverse at some point. Treasuries should rally fast and furious when Greece eventually cracks up and takes the rest of the PIIGS and perhpas the whole eurosphere down with it. Everything is momentum right now: dancing until the music stops. And stop it will eventually. Expect a repeat of October 2008 at some point.