TLT the exchange traded fund (etf ) that tracks the treasury long bond has been displaying some unusual movement lately. TLT has been one of the few ways to make money in the market over the last year.
The upward trend has accelerated over the last couple of weeks, tracking up 20% since November 17. The reason is fear, fear of deflation and depression, almost panic buying. In a deflationary environment this long term treasury will rise while its yield will decrease. See the chart to the left for the 1 year trend.
Be very careful here though. There are a lot of reasons why inflation may make a come back in the long, if not short term. Reasons include, all the stimulus and bailout programs, less buying of treasuries by foreign governments among others. If (when?) inflation comes back TLT will drop like a rock.
The upward trend has accelerated over the last couple of weeks, tracking up 20% since November 17. The reason is fear, fear of deflation and depression, almost panic buying. In a deflationary environment this long term treasury will rise while its yield will decrease. See the chart to the left for the 1 year trend.
Be very careful here though. There are a lot of reasons why inflation may make a come back in the long, if not short term. Reasons include, all the stimulus and bailout programs, less buying of treasuries by foreign governments among others. If (when?) inflation comes back TLT will drop like a rock.
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