Saturday, November 29, 2008

30 Year Treasury Yield -- Target in Sight

on September 8th I posted this chart of the 30 year Treasury yield:



in that post I also happened to write the following:

once this breaks below 4.1% and then 4.00%, the rate could easily decline to 3% (or lower) over a three to six month period (and it could move even faster than that). fair warning.
about a week after I wrote that the yield dropped below 4% for the first time. and then it spent the next couple months churning back and forth. but the last two weeks has finally given the follow through I expected. I say 'finally', which is funny. I've been waiting for this moment for like five years so I guess two months isn't a big whoop.

I'm tempted to stick my tongue out and make fun of all the bond bears I've encountered over the years. but some of these people are good friends of mine, so I'll be polite and just stick my tongue out for a second before moving on. okay I'm done now. that was fun.

so it's been what, two and a half months now since the yield first ticked below 4%? and the rate's like 3.5% now? so we are about half way to my target (see quote above). and furthermore the train is pretty much on schedule. who says the government can't get anything done on time?

here is the updated version of the point and figure chart:



I gotta say though that after the surge the week before, I am pretty surprised that bond prices saw such decent follow-through this last week. I suppose on a reaction that T-Bond futures could slip down to 122 quickly, but, you Know, sometimes when a market goes bubbly it just don't stop till it's over. but I'm not going to sully my pristine bond market track record with any more forecasts. besides, if you didn't listen to me the last three and a half months about this shit, I certainly don't advise listening to me now. go read some commentaries on kitco or seeking alpha or minyanville (they got fuckin' cartoons there! how can I compete?).

by the way, if you are looking for something to watch this weekend, here's a video of Niall Ferguson, some dude who works the Think-Tank lecture circuit. the reason I'm posting it is because he actually talks about the coming 'bond bubble'. not too many others out there have been hip to this, so I'm fairly impressed. overall Ferguson's speech is alright. he makes a number of decent points, but there's something about him that just annoys me for some reason. maybe it's his latent neo-ism. (neo-liberal or neo-conservative I'm not sure. whatever it is it is an aesthetic turnoff.) plus his voice is annoying. hell just watch the damn video if you want. here: