I Shorted the United States Treasury Market (And You Should, Too)
Are we about to witness a final blow-off top to Treasuries, sending them below their post World War II record low?
--Paul Tudor Jones
The 30-year bull market that began in 1982 in US Treasuries is coming to an end. Since the financial crisis began in 2008, investors have flocked to non-paying yield assets for safety and protection against principal loss, evidenced by their four-year annualized return of 15.62%. In early February I highlighted this dynamic stating: "From 2007-2011 retail investors sold $450 billion domestic equity funds and purchased $930 billion bond funds, a startling $1.4 trillion difference. The long-awaited reallocation out of fixed income investments will begin to take form and provide a rotation back into the stock market; historically the stock market peaks with the 10-year US Treasury yielding 4%." The truth we must keep at the forefront of our focus is that the crowd is prone to believing that an increase in interest rates is good for stocks. While in the early innings, rising rates tend to lend a helping hand to the stock market, over time, rising inflation is a significant head wind to both the market and the broader economy.
Click to enlarge
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter