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Is the Rally in Treasury Bonds Over?

Posted By Barry Ritholtz On January 30, 2012 @ 11:00 am In Fixed Income/Interest Rates,Investing | Comments Disabled

One of my favorite sections of Barron’s each week is the Review/Preview — including a weekly question where they ask “They Said What?” Its a weekly must read.

This week, they asked the loaded Is the Rally in Treasury Bonds Over?

Here are the answers:

David Goldman
Principal, Macrostrategy.com
“There has been a near-perfect inverse correlation between commodities and term yields, and that shows that the Treasury market is starting to worry about inflation, as well it should. The big commodity-price recovery is bad for bonds. Asian demand will lift commodity prices, so bonds will underperform.”


Jim O’Sullivan
Economist, MarketWatch forecaster of the year, 2011
“It’s hard to get too bearish on bond yields near term, but chances are yields will be up more than down in coming months, if the economy grows modestly.”


David Rosenberg
Chief economist and strategist, Gluskin Sheff
“No. By the time it’s over, the yield curve will have mean-reverted to 200 basis points from today’s 275 basis-point gap. Since the Fed will keep short rates at zero through 2014, the inevitable flattening of the curve will occur via much lower long-term yields.”


Jason Hsu
Chief Investment Officer, Research Affiliates
“It’s anyone’s guess whether Treasuries will move up or down in the next six to 12 months. But the secular yield decline has probably reached its bottom.”

Fascinating stuff.


They Said What? U.S. Bonds [1]
Barron’s January 28, 2012

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[1] They Said What? U.S. Bonds: http://online.barrons.com/article/SB50001424052748704895604577178961898660908.html

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