Thursday, July 16, 2009

Treasury Bull Market Continues

Volatile? Yes. Upward pressure? Sure. But, David Rosenberg states why we are still well within the secular bull market for ten year treasuries:

To be sure, this has been a brutal year for U.S. Treasuries, with the yield on the 10-year note nearly doubling this year at the June 10th peak of 3.98% (though the Treasury market has generated a +2% return so far in July — the first positive showing since March). From our lens, it cannot be said that the secular bull market in bonds is over until the 10-year breaks above 5.26% because then and only then will we be able to say that for the first time in this 28-year secular bull phase, the prior interim high was “taken out”. Look at the time series below and you will see that ever since bond yields peaked during the inflation bubble of 1981 they kept on hitting lower and lower “highs” during the eight cyclical selloffs, and they continuously made lower “lows” during the intermittent eight cyclical rallies.
Table in chart form below...


Source: Gluskin Sheff