Wednesday, March 14, 2012

About that Treasury Blood Bath

Pundits, bloggers, experts, etc... have been calling for a Treasury sell-off going on 3-4 years now (here is a post of mine from January 2009 on that exact subject.... and one from October 2010...and one from January 2012) so it is no surprise that the recent sell-off has brought the bears back out.

Global Macro Monitor even says we may be starting what it refers to as the Bond Market Arab Spring.

Wow... that's bold. Let's see the beginning stage of the massive sell-off they are referring to.

Yeah... I don't see it (yet) either.

While any sell-off has the potential to become the large sell-off EVERYONE has been waiting for (economic data is improving, yields are very low, inflation is ticking higher), I am not yet convinced it's the sure thing these "experts" want you to believe.

But, I guess if you keep making the same prediction, eventually it will come true.


  1. On the other hand, when one looks at the 10-year UST since 1953, perhaps they will be right....

    10 Year UST.

  2. Ah yes, 1953. Post war, rebuilding the country's economy, jobs were plentiful, birth-rate exploding, increasing demand for housing, cars, goods with rapid poulation expansion, ... all leading to increase demand for money which translates into higher interest rates. Unfortunately, none of this applies here and the risk of deflation is very real. Buy treasuries.

  3. Looking at that chart, it took almost 15 years for rate to move from 2.5% above 4%. So we should be worried about 4% rate (i.e. low rates) in 2026?

  4. "Even a stopped clock is right twice a day", yes? Read some commentary from Hoisington Investment Management for an alternative view from the consensus.