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Treasury Bonds

Dec 11 2020

Bond Yields: Cyclical Pressures Vs. Positioning

  • Dec 11, 2020

Even after watershed events COVID-19 and MMT, some things never change.

Next year will begin like almost every one of the past dozen years, with economists and strategists expecting bond yields to rise.

Unlike most of those years, though, there are several measures of “cyclical pressures” that would seem to give them a good chance of being right. The best-known among these might be the “Copper/Gold Ratio,” popularized by DoubleLine’s Jeffrey Gundlach, which suggests 10-Yr. Treasury yields should be around double their current level (Chart 1).

Aug 07 2018

“Unlevered” Treasuries Aren’t A Bubble

  • Aug 7, 2018

It’s been popular to argue that U.S. government bonds are a bubble while U.S. equities are not. But even if we agreed, the potential cyclical total return losses in Treasury bonds are a fraction of those likely to occur in an equity bear market.

Apr 13 2018

The Bear Market No One Discusses

  • Apr 13, 2018

Yields on 10-year Treasury bonds have still not breached the 3.00% level that many believe will stick the proverbial “fork” in the secular bond bull market that began in 1981. That could well in happen in the next few weeks, but we believe it’s important to step away from the daily fray and reflect upon the damage that’s already been done.

Jan 06 2018

Four Divergences—A Steepening Correction

  • Jan 6, 2018

While we still believe flattening is the more likely scenario over the medium term, we do feel the recent flattening move is a bit overdone and there are several divergences that suggest a short-term steepening correction is in store.

Nov 07 2017

A Mysterious Bond BUY Signal…

  • Nov 7, 2017

Sometimes we feel compelled to report findings that conflict with our outlook. And then there are the even rarer times we actually do it.

Nov 23 2016

Hare Passes Tortoise

  • Nov 23, 2016

Last week we overlooked a key milestone among the daily parade of new stock market highs: The Stock/Bond Total Return Ratio finally exceeded its cyclical high from the summer of 2007. Since July 13, 2007, the S&P 500 has generated a cumulative total return of +73.5%, just ahead of the U.S. 10-Year  Treasury Bond total return of +70.0%. These work out to annualized returns of around 6.0%.


Jan 08 2016

Bridesmaid Asset Strategy

  • Jan 8, 2016

Liquidity “consuming” strategies like price momentum are generally considered to be more volatile than liquidity “providing” approaches like value investing.

Jul 08 2015

A BUY Signal That Says SELL?

  • Jul 8, 2015

Last month we discussed the negative market implications of May’s “Death Cross” signals in the Dow Transports and Dow Utilities.

Dec 05 2014

What To Do With Broken Models?

  • Dec 5, 2014

With the quantitative horsepower now available at the fingertips of even the most technophobic portfolio manager, there’s little tolerance for any model that finds itself out of sync. But “broken” models (and especially value-based ones) have an eerie way of reasserting their relevance just after they’ve been finally tossed to the trash heap.

Jan 08 2014

Buy The Bridesmaid, Not The One Looking To Rebound

  • Jan 8, 2014

The investment leadership of a given year has historically had better-than-even odds of outperforming in the following year at both the asset class and equity sector levels.

Feb 06 2013

The Math Doesn’t Work For Long-Term Treasuries

  • Feb 6, 2013

The recent upside breakout in the U.S. 10-year yield was successful, and it appears interest rates will remain in the new higher range for now. But what are the short-term implications of higher U.S. Treasury rates on asset allocation decisions?


Jan 07 2013

The Upside Breakout

  • Jan 7, 2013

We still think interest rates are likely to be range-bound, but the range will likely shift higher to the 185-240 bps area if the current breakout is successful.

Dec 06 2012

The State Of Interest Rates

  • Dec 6, 2012

We think interest rates will stay low for an extended period of time, so the key question is, when will rates start rising?


Oct 04 2012

Chasing Income That Barely Exists

  • Oct 4, 2012

Those adopting LDI today are doing so at the least opportune time in more than 60 years.

Sep 07 2012

The Reach For Yield… And Its Consequences

  • Sep 7, 2012

Investor infatuation with portfolio income is higher than ever, just as there is less of it available than at any time in history.

Sep 07 2012

Not So Calm In The Bond Market

  • Sep 7, 2012

The failed break-out to the upside on the U.S. 10-year yield fits our expectation of a range-bound but higher-volatility environment.


Jun 06 2012

The Bubble In Bonds...

  • Jun 6, 2012

Yes, we consider U.S. Treasury securities a bubble across the entire yield spectrum, and the situation has probably now moved into “extra innings” (think 10th or 11th) thanks to the flight to (perceived) quality triggered by the European debt crisis.

Apr 04 2012

Bonds: Beginning Of The End?

  • Apr 4, 2012

Today’s bond market is reminiscent of the stock market in April 2000—when the first cracks in tech and telecom had appeared.

Apr 04 2012

Start Of A New Bond Bear Market Or Not, There Is No Need To Rush

  • Apr 4, 2012

Whether it’s the start of a new bond bear market or not, there’s no need to rush... and why shorting bonds may not be the best idea, even during a bond bear market.


Feb 05 2012

Looking Deeper Into The Tails Of Distribution

  • Feb 5, 2012

Leuthold’s Eric Weigel examines both positive and negative tail risk among asset classes over two time periods… the recent volatile era versus a preceding, not-as-volatile time period.

Jan 05 2012

Risk Premium for Stocks Making a Comeback…

  • Jan 5, 2012

Andy Engel revisits our Stock/Bond Performance Differential study which examines rolling stock/bond spreads over various time periods and subsequent asset class returns.  It appears that trends are finally reverting slowly toward the norm.


Sep 04 2011

Lost Confidence In Washington….. But Not U.S. Treasuries

  • Sep 4, 2011

The new deal reached by Congress has little substance and no impact at all until 2014 or beyond. More “kick the can down the road.” Long term debt/deficit issues remain unsolved.



Aug 04 2011

Losing Confidence In Washington But Not U.S. Treasuries, At Least Not Yet

  • Aug 4, 2011

The inability of our politicians to recognize and resolve short and long term debt/deficit issues has caused many of us to lose even more confidence in Washington.


Aug 04 2011

It’s The Economy, Stupid

  • Aug 4, 2011

U.S. likely averted worst-case scenario of default, but credit rating downgrade is still likely. Main impact of downgrade is not the increase in interest rates itself, but rather the liquidity risk in all markets that involve treasury securities as collateral.


Jul 05 2011

Longer Term Concerns About U.S. Debt And Deficit

  • Jul 5, 2011

$4.8 trillion of the additional $9 trillion in debt that Uncle Sam is expected to incur over the next decade is interest obligation.

Jun 05 2011

Another Walk On The Short Side

  • Jun 5, 2011

In mid-May, we re-initiated a short position across all three tactical funds in U.S. Treasury bonds.

Apr 05 2011

The Bond Bubble Is Beginning To Deflate… Is This Cheap Money Era Ending?

  • Apr 5, 2011

Long term interest rates could continue rising, as inflation expectations increase and investors demand higher yields.

Mar 04 2011

The Bond Bubble Is Beginning To Deflate… Is This Cheap Money Era Ending?

  • Mar 4, 2011

Bond bubble deflating, as investors demand higher yields to compensate for rising inflation and mountain of debt.

Feb 04 2011

The Bond Bubble Is Beginning To Deflate… Is The Cheap Money Era Ending?

  • Feb 4, 2011

The bond bubble is deflating, as investors demand higher yields to compensate for expected rising inflation and the U.S. mountain of debt.


Jan 05 2011

Risk Premium For Stocks Making A Comeback

  • Jan 5, 2011

History appears to be repeating itself as the risk premium for stocks is making a comeback. Ten-year Treasuries are now the riskier asset class compared to equities.


Oct 05 2010

Slowly Righting The Ship Of Risk And Reward

  • Oct 5, 2010

Stock/bond Risk-reward relationship beginning to return to normal. Back in Q1 2009, performance differential between S&P 500 and 10 year T-bonds was at generational lows. In prior periods of bond superiority, stocks ultimately came soaring back. Expect to see stocks do much better over next 5 years.


Aug 03 2010

Lookback Blues… Still Depressing Long Term Equity Performance

  • Aug 3, 2010

It’s easy to see why equity investors are so down when looking at updates of the long term stock market performance. It’s even more depressing when long term equity returns are compared to bond returns.


Jan 04 2010

Testing The Treasury Bond Yield

  • Jan 4, 2010

The longer term data does suggest that at current interest rate levels, investors can expect sub-par returns over the next 1, 3, and five year timeframes— and we use the term “sub-par” quite literally.


Jun 03 2009

Raising Longer Maturity U.S. Treasury Twelve Month Interest Rate Targets

  • Jun 3, 2009

Jim Floyd is boosting his 12 month interest rate targets by about 50 basis points across the board. The economy is expected to be showing signs of recovery by year end 2009, and the credit markets are thawing.

May 05 2007

Bond Sentiment: Window Closing For Bulls?

  • May 5, 2007

Since economic fundamentals are providing little help lately, an understanding of bond sentiment has become especially helpful.

Jan 03 2007

2007 Outlook: CPI Tame First Half And Economy Chugging Ahead Slowly

  • Jan 3, 2007

Expect economic recovery to pick up a little steam in early 2007, before slowing down in the second half. A 2008 recession is a possibility. 

Jan 03 2007

Expectations For Bonds Still Too High

  • Jan 3, 2007

Despite the December correction, our 10-week Hines ratio (a modified put/call ratio) continues to show rampant speculation in T-bond futures call options, suggesting speculators are still betting on declining yields. 

Jun 04 2003

View From The North Country

  • Jun 4, 2003

Does consumer confidence offers any insight into future spending patterns? Also, the case for shorting T-Bonds.

Jul 05 1999

Bond Market Summary

  • Jul 5, 1999

Recent 25 basis point bump-up by Fed will not be the last. More tightening seems likely but T-bonds now look to be in the high end of a buying zone.

Mar 02 1999

Bond Market Summary

  • Mar 2, 1999

Big Rise in Treasury yields has resulted in improved risk/reward profile for T-bonds.