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I think the 2 year part of the curve is oversold. I think (I know) the economy is weak. It is an election year and the unemployment rate just jumped to 5.5 percent. The housing market is a debacle. The Fed’s favored metric - the core PCE - has strayed very little from the top end of its prescribed  range. Hemingway and Fitzgerald are not writing novels about World War One, and this is not the Weimar Republic.

The credit markets are frayed frazzled and fragile. Recovery has barely begun.

I bought some iShares Lehman 1-3 Year Treasury Bond ETF (SHY) this morning because I think that any move to higher rates is a dream deferred. The Fed won't tighten, and these are fair levels to establish long positions in the front end of the yield curve.

Disclosure: Long SHY

Source: The Fed Won't Tighten - So SHY's a Buy