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Treasury prices reverse losses and turn higher as Cummins provides a grim picture of global...

Treasury prices reverse losses and turn higher as Cummins provides a grim picture of global economic growth. The 10-year yield dips under 1.50%, within range of its modern-era low of 1.44%. The long bond yield falls to 2.60 (record low is 2.50%). TLT and SPY are neck and neck for the year, both up over 6%.
Comments (7)
  • 10 year headed to 1%; 30 year 2.25%
    10 Jul 2012, 03:01 PM Reply Like
  • Agreed on the targets
    10 Jul 2012, 04:40 PM Reply Like
  • What's the point of buying a ten year if it only yields 1%?


    The bond market has gone full tilt crazy.
    10 Jul 2012, 09:18 PM Reply Like
  • If the ten year now yields 1.5% and it goes to 1% as you are implying, then the UST bond you bought for $1000 is now worth $1500 on the secondary market. Not bad.


    Let's compare that to the S&P. While it is up 6% year to date, at the end of the second quarter, it was up 12%. Congratulations, you have lost half your gain in a month. That is assuming you bought in some time during the first quarter and still have a gain. Any purchases made after the first quarter and you are losing money.


    The bond market has not gone crazy. It is quite sane. It rewards investors who understand the risks in the current market.


    10 Jul 2012, 10:13 PM Reply Like
  • We are rapidly approaching the time when people will be indifferent to holding cash vs. other investment options. The efforts of the Fed to induce "risk-on" can only go so far down that line.
    10 Jul 2012, 04:24 PM Reply Like
  • Hello Mark,
    By indifferent, do you mean folks will default to cash as is now an ongoing trend? It is conceivable that the trend will continue as "Risk On" stimulus achieves increasingly diminished results.
    10 Jul 2012, 09:09 PM Reply Like
  • Default to Cash could be a measure of "indifference". IMHO a true definition would be no incentive to change a position from cash to risk asset or vice-versa. The question becomes with a QE3, etc....will they push people to unload that risk on asset in favor of cash.
    11 Jul 2012, 12:03 AM Reply Like
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