I can name a few reasons for that:The 30 year bond had 50% higher return than gold!! What in carnations is going on?!!? I wouldnt have believed it.
What is the explanation for this?
I am truly baffled by this.
thanks. good book by the way. i ll order it. the reviews are good.I can name a few reasons for that:
1. operation twist. The FED is buying long term treasuries. Prices are not set by Mr Market.
2. Treasuries are clearly in the mania phase of the 30 year bull market which started in 1981. The whole yield curve is yielding negative real (inflation adjusted) returns. This is unsustainable. Interest rates have long term cycles of about 30 years (Read: Richard Homer - A History of Interest Rates; an excellent book), we are at the very end of the bull cycle. I´m short 10 years even if it might take a year or two until I make money on that trade.
3. Treasuries are accepted as collateral for loans in the interbank market as well as for FED funding. Money markets are desperately searching for collateralizable assets right now.