Why Not Be Bullish on Treasuries?

 | Apr 09, 2014 | 11:00 AM EDT  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:


Being bullish on Treasuries has been an unpopular stance for quite some time. In fact, anybody willing to publicly pledge support for the low-yielding, government-manipulated securities has been an easy target of social media ambushing (unfortunately, I speak from experience). Yet, from a trading standpoint, being a bull hasn't been such a bad proposition for anyone willing to play against the grain.

The iShares 20+ Year Treasury Bond Fund (TLT) is up nearly 7.5% in 2014 (before considering the meager interest earned), and for those trading the futures-market counterparts, the 30-Year Treasury Bond Futures (ZB) and the 10-Year Treasury Note Futures (ZN), the gain is closer to 5% and 3%, respectively. We realize this is chump-change relative to the 2013 days of high-flying equities, but should the bull market in stocks falter, the Treasury market will see a substantial jolt.

Source: QST/Barchart.com 

For instance, from late summer 2011 through late fall of the same year, the S&P 500 suffered an approximate 20% correction. During that same time, the Treasury market rallied in excess of 30%. For full disclosure, we arrived at this figure via TLT exchange-traded fund data because the futures price changes account for contract rollovers and other factors that might distort percentage changes over longer periods.

Nevertheless, it is clear that if the seemingly endless bull market in stocks loses footing, the Treasury market could be a direct beneficiary. After all, the Federal Reserve might not be buying Treasuries as heavily as it once was, but it is still a big buyer.

Also, as we learned from the negative interest rates in 2008, when investors panic, yield is inconsequential. It is worth a moderate speculative play, which also acts as a hedge against the average equity portfolio.

Source: QST/Barchart.com

Columnist Conversations

The Twitter conference call was among the worse I can ever recall. Management team is virtually dysfunctional ...
I am beginning to replace my sold Twitter in after hours at under $33/share on a scale. As extreme the rise wa...
Good day in market but some of the rises in oil related and industrial names today seem like dead cat bounces....
A big shout out to "Monkey Girl" who I gave Twitter stock to on the occasion of her Bat Mitzvah this year - an...



News Breaks

Powered by

Columnist Tweets


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.