Wisdom-Seeker

U.S. Long Bonds: Be Careful, We're in Injury Time

I'd be leery of applying _stock_ technical chart patterns and chart analysis to _bond_ ETFs. The factors that move Treasuries (and, for Goatfarmer, TIP) are not the same as those that move equities.

Although bond yields can't stay low forever, it's historical fact that the 10-year Treasury yield did stay very low, and I think didn't cross above 5% at all from about 1930 to about 1966). The stock market of course doesn't behave like that.

In any case, there's a significant probability of a deflationary scenario playing out (e.g. Great Depression, Japan 1990s, and plenty of other countries historically) in which case long bonds will do very well, while TIP will get crushed since the return will be exactly zero. Conversely, in an inflationary crisis, the long treasuries will get crushed (as in the 1970s) but TIP will lag since government will have strong incentives to continue to suppress the CPI readings, to avoid a medicare/social security death spiral. If you believe in inflation, equities or hard commodities could do better.

Thursday Outlook: Commodities, Emerging Markets

Actually, one could take that paint analogy another way: the more volatility there is, the longer the "stripes" are on the charts, and the faster the paint gets used up in making the chart!