Published Mon, 13 May 2019 16:19:46 -0400 on Seeking Alpha
Treasury Yields: Waiting On The Next Catalyst
Treasury yields are likely at a temporary sticking point, waiting for the next catalyst to move yields materially in either direction. When I talk about yields being at an important level, it should not be confused with technical analysis. I don't use technical analysis in my approach. The economic analysis suggests that Treasury yields will have a hard time moving materially lower without a new catalyst as I will outline below. This is more of a short-term outlook as my medium and long-term bullish outlook on bonds across the curve remains intact.
Before diving into the analysis on Treasury rates I want to call out an analysis I made on long-term bonds, specifically ETF (TLT) in October of 2018 when the consensus was firmly in the bond bear camp, and everyone thought rates were breaking out to the upside. The analysis I used to forecast the decline in interest rates, although it was a lonely forecast, is the same analysis I am using today on interest rates.
In October of 2018, the 10-year Treasury rate was 3.17% and climbing, and the 30-year rate was nearly 3.40%, miles from where we are today.
Here is what I wrote in October when the 10-year rate was nearly 3.20% and TLT was at $114:
Summary - I'd Be A Buyer Of Long Term Treasury Bonds
I am a long-term investor and these short-term moves in rates and stocks are for the traders.
If you buy long-term bonds today, it will prove fruitful as we have not yet seen... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|BLACKROCK INCOME TRUST||6.02||0.0||0.00||0.00||6.85|
|VANGUARD EXTENDED DURATION TREASURY ETF||137.28||0.0||0.00||0.00||2.29|
|ISHARES BARCLAYS TIPS BOND FUND||115.82||0.0||0.00||2.15||1.85|
|SPDR BARCLAYS CAPITAL 1-3 MONTH T-BILL ETF|
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