Jeff Kilburg
Founder, CEO & CIO of KKM Financial, Contributor to CNBC
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 US Treasuries show textbook capitulation, suggesting the 10-year yield is near a temporary top. Long bonds have closed below the lower Bollinger band for five straight days on rising volume, with implied-volatility rank at an extreme, a sign of extremely crowded shorts. High rates do little to restrain highly profitable companies such as big tech and semiconductors. 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 look worth a small long: recent market action testing Treasuries is likely wrong, and the 20-30 year part of the curve is what the Fed can most easily push around. The Fed may raise rates but would not do QT. A long 30-year position also trims some overall oil beta. x.com x.comÂ
Long-dated Treasury yields have likely peaked, which should force an epic short covering in bonds. Yields fell about 6bps across the curve as WTI crude dropped about 5% in a day. Out-of-the-money options on Ultra Bond futures offer the convexity to pay out 100x or more if the view proves right. x.comÂ
Long-dated Treasury yields have further to rise, because the government keeps announcing more long bonds, not fewer, even as demand for 30-year bonds at 5% is weak. 5% is not where it stops. x.comÂ
Falling Treasury yields reinforce the growth-scare thesis and mark a bullish turn for long-dated Treasuries. The 10-year yield is breaking below 5% as TLT rallies. x.comÂ
Long-dated US Treasuries look favorable as the rise in 10-year yields appears mostly over; inflation searches have peaked, and only 13 of 29 tracked commodities are above their 50-day averages. x.com x.com x.comÂ
The break in 30-year Treasuries shows the long end losing control as the world slowly starts ignoring the US. Per the FT via @unusual_whales, the White House accused more than 40 countries of helping China evade US tariffs, which signals the US does not control anything. The 20-year is also losing its level; if prices lose $82, the next wave is likely to $70. x.com x.comÂ
Long-dated Treasuries could rally after a Fed hike, because a hike could lower or at least cap the 10-year yield more than any other intervention at this point. The 10-year yield bottomed near 3.66% when Powell started cutting in September 2024 and has not returned there since. @lord_fed's point that the long end may rally after the hike, having sold off through the 2024 cutting cycle, holds. x.com x.comÂ