A Rebound For Treasury Bonds?
Tiho Brkan | Oct 01, 2013 03:55AM ET
If you have been reading this blog for long enough, you would understand that I am extremely negative on Treasury Bonds (actually almost all bonds). The view stems from the fact that interest rates have declined for over 30 years (in other words bond prices have been rising). Eventually, this trend will end, as previous trends before it in 1981 (peak in rates) and 1949 (trough in rates).
Chart 1: Treasuries have performed awfully over the last 12 months
However, from the shorter term perspective, bond prices have fallen dramatically over the last year and have become very oversold. Truth be told, prices are more than 2 standard deviations below the decade long annual performance mean. Therefore, it would make sense for certain traders with high risk tolerance to consider buying Treasuries for the next 3 to 6 month time frame. They could definitely outperform both stocks and cash.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.