Dragonfly Capital | Dec 20, 2013 01:10AM ET
A year end series taking a longer perspective in many market indexes, macro related commodities, currency and bonds. Over three weeks these reviews are intended to help create a high level road map for the the next twelve months and beyond. We continue with US Treasury Bonds (TLT).
US Treasury Bonds are seen as a measure of inflation expectations. Demand for them is also used as a proxy for risk appetite when compared to equities or lower credit bonds.
They have long been seen as a store of value and are the go-to asset on a flight to safety. The monthly chart below for my US Treasury Bond proxy, the iShares Barclays 20+ Year Treasury ETF, (TLT), shows many of these events. The spike in 2009 as the financial crisis hit. And the rise in prices as the Federal Reserve began its stimulus programs, buying bonds and mortgages.
You can also see the sharp reversal when the Fed made it known that they would shut off the faucet at some point. But there is some very interesting data there as well for the interested eye. Bonds started a shallow rising trend support in mid 2006 that continued among all these exogenous factors that pushed it around on violent moves. Look at 2002 through 2008. Just a tight narrow range as shown by the shaded box.
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