Namzes Cycles
Hurst Cycle & Technical Analyst, Commodities/Crypto/Equity Indices, Risk Management Background
Long-dated Treasuries carry duration risk that isn't worth taking given a structural 6% U.S. deficit and bipartisan acceptance of inflation to support asset prices. With 4.5% available at the short end, there is little reason to own the long end. Even Lacy Hunt, long confident in deflation, is throwing in the towel on long bonds over fiscal largesse. Six years after Covid nothing has changed, so this is not about a local tradable bottom. x.com x.comÂ
Inflation has broken long-dated US Treasuries' safe-haven role. Long-term Treasuries have returned -4.1% annually in the 2020s to date, versus +4.9% in the 1930s. Long bonds look unlikely to do well for at least the rest of this decade. x.com x.com x.com x.comÂ
Long-dated US Treasuries face pressure because the market will buy US debt only at 5%-plus yields, with no short-term fix in sight. The 10-year yield keeps climbing parabolically as Washington issues enormous debt to fund deficits, investors demand more compensation for inflation and duration risk, the Fed is now raising rates, and Treasuries must compete harder for global capital. The government seems reluctant to act, while rising oil prices add to inflation pressure. x.comÂ
Long-dated Treasuries are the safe-haven trade again as money rotates into yield. With the 30-year paying over 5%, holding non-yielding assets is harder to justify; after the Fed held, yields fell across the curve and TLT rose 1%. x.comÂ
Long-dated Treasury yields keep rising because of US debt: Hormuz traffic has recovered and PCE inflation is cooling, yet yields won't come down. The government refinances $9 trillion a year plus over $2 trillion of new borrowing, about $30 trillion of issuance through 2030. With faster growth and deficit cuts seen as unlikely, investors see inflating the debt away as inevitable and refuse lower yields, pushing up the term premium itself, the textbook definition of a debt spiral. x.comÂ
Long-dated Treasuries stay pinned because the long end now prices deficits and issuance rather than the policy rate. Even when the Fed cuts the front end, term premium and supply keep the long bond down, which is why cuts have not helped. Per Charlie Bilello, the US bond market has been in drawdown for 71 months, by far the longest on record; bonds losing to inflation six years running is the debasement trade, and why hard assets keep getting bid. x.com x.comÂ
Long-dated US Treasuries benefit from falling long-end yields as the Fed's inflation response becomes a policy error. The Fed looks likely to hike again to defend its credibility despite a supply shock; 5% rates are unsustainable, and current price action points to financial damage followed by a hard pivot. A one-year rate freeze could instead let long yields rise by giving the economy a breather and making later hikes more likely. x.com x.com x.com x.comÂ
Long-term Treasury yields keep climbing because investors increasingly doubt America enough to lend to it for 30 years, and nobody can force them to lend cheap. US debt is $40 trillion, interest costs over $1 trillion a year, more than the military, and the deficit is 6% of GDP during a boom. Treasury Secretary Scott Bessent's $4 billion buybacks are fake demand that fixes none of the overspending, a point Stanley Druckenmiller made in his op-ed "Let the Bond Market Speak." x.com x.com x.com … Show more
Long-dated Treasury yields are anchored by fiscal policy, not the Fed, so without a credible budget plan bond buyers keep pushing them higher. Moving holdings to the short end turns Treasuries into quasi-money T-bills, which adds to inflation and lifts the whole curve. Ray Dalio says Japan selling US bonds, long-end yields at new highs with a weaker dollar, and Scott Bessent's limited buyback plan fit his template for how countries go broke. x.com x.com x.com x.comÂ
Long-dated Treasuries look oversold because Treasury Secretary Bessent is likely to intervene soon. Long-end yields reflect term premium from a fiscal problem, not inflation fear, and only the issuer can fix it by shifting supply to bills, sizing up long-dated buybacks and signaling it. Treasury already doubled long-dated buybacks in August. With a trillion-dollar interest bill, policymakers have a pain threshold; the 1942-1951 yield cap is the precedent. @UrbanKaoboy sees a capitulation bottom. … Show more
Long-duration Treasuries are functionally uninvestable if held to maturity because their real return is negative, a problem for the Fed and Treasury that has Hank Paulson calling a break-the-glass plan inevitable. Marty Bent notes long-end yields look ready to break out, so interest on the debt could surpass Social Security spending sooner than most expect. x.comÂ
