Stephen Manning
Founder of Cash Flow University, Options Education, Public Setup/Risk/Exit Reviews
Long-dated Treasuries are under pressure because a strong labor market keeps yields climbing; good news for workers is bad news for bonds right now. Jobless claims came in at 197,000 for the week of September 19, below the 200,000 estimate, and the long-bond ETF closed at its lowest price since its 2002 launch. The safe half of 60/40 has proven not riskless. x.com x.comÂ
Economic projections for falling inflation and rising unemployment leave December as the only window for another Fed hike, exposing long-dated Treasuries to more selling as yields rebound. Treasury buying has cooled yields ahead of the midterms, but yields should rise again with stocks and crypto through year-end. The subsequent liquidity shift should bring bearish volatility at first; then TLT should break above 81-82 as the Fed turns to cuts of at least 50 basis points by March 2027. 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
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
The secular rise in Treasury yields will likely last longer and go further than most expect, making bets on a yield low premature. Investors tried to time the low in yields from the early 2000s and were 20 years early. The most rate-sensitive sectors, homebuilders, mortgage names and private equity, where smart money would show up first if a turn were near, show no hint of accumulation. x.com x.comÂ
BlackRock will eventually be hit when increasingly weak market breadth blows up, though not yet. There is nothing to worry about as long as the 4Q21 level, the S&P 500-to-gold cyclical peak, acts as support and the monthly 20-period moving average holds. 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
The 10-year yield above 5% limits how far the US equity rally can stretch, even as stocks shrugged off the Fed hold. Two policymakers wanted a hike, the 10-year rose to about 5.04%, and bonds sold while all four major indices closed higher. Rates need to cool for the rally to extend. x.comÂ
High Treasury yields keep US real-estate stocks from being a buy yet, despite a record low against the S&P 500. Each hike pushes the sector lower; the 10-year yield above 5% argues for waiting rather than assuming rotation is inevitable. A turn likely needs falling rates, perhaps a first cut or the 10-year back below 4%. x.com x.com x.com x.com x.com x.com x.com x.com 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-dated Treasuries are losing demand because an accelerating economy offers better opportunities than a 4% yield. The Citigroup Economic Surprise Index is rising sharply as data beats estimates. Yields are climbing while crude oil falls, so the move reflects growth rather than inflation fears, and the bond market is giving the Fed permission to hike. Treasuries, gold and defensive equities are slumping because no one wants safe havens in a risk-on market. x.comÂ