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A nice chart from Goldman makes clear the risk in holding long-term Treasury paper at these...

A nice chart from Goldman makes clear the risk in holding long-term Treasury paper at these yields. While a 100 basis points increase in rates hurts anyone holding Treasurys, low yields effectively lengthen a bond's duration, making a rise in rates especially painful. Rates were high enough in the 80s that even a 100 basis point spike in yields still left Treasury owners with a positive return - now that's good risk/reward.
Comments (1)
  • Anonymous 2
    , contributor
    Comments (309) | Send Message
     
    The price of TLT is below both the short term 4 Day EMAL and the 50 Day MAL.
    It will be interesting to learn from those who "know" the potential (technical, of course) implications if/when TLT price will have a closing price below BOTH the 50 and 200 day MAL.
    It has only done so - for only one day - three times since April of 2011 - 18 months ago - when it traded at 90/share - now up 33% .
    TIP has traced a similar but less volatile price chart.
    3 years ago it was already above both it's 50 and 200 day MAL at a price of 94.
    TIP is currently at 121.7 - up 30%. AND it has closed below both of these 50 and 200 day longterm moving average indicator only twice in past three years - in December 2010 for 2 days and again in February for three weeks during which time the 200 day MAL continued to remain in a bullish trend. Tip is still above BOTH the 50 and 200 day MAL and both of these MALs continue to trend UP.
    The 200 day MAL is at 118.91 - a little more than 2% above the current price.
    22 Oct 2012, 12:50 PM Reply Like
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