Mike
Investor, Creator of HiddenSmallCaps
Long-dated Treasuries could benefit from less issuance of AI-related debt, which today's news may point to, even if the deal itself is minor. Separately, a free Meta Muse hurts the leading AI models at least at the fringe, and wide consumer adoption of AI agents will come when Apple launches its own or partners with a model maker. x.comÂ
Potential spending cuts and AI-related deflation make long-dated US Treasuries an asymmetric opportunity. A Democratic sweep could cut spending; an AI-trade blowup could cause deflation, while the AI trade hurts employment. Ending the Iran war could reduce spending and oil prices. Further crude gains could damage the economy hard and quickly enough to outweigh the inflation threat. 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-dated Treasuries remain under pressure from historic AI borrowing and hot price gauges, even as the long end eases from 2002 highs. The AI sector has raised about $500 billion of debt in nine months, a quarter of all corporate issuance, and Goldman Sachs sees $1.2 trillion in 2027. Monday's ISM services prices-paid gauge hit its highest in over four years, and a December Fed hike is still largely priced. The 10-year back above 5.35% would end the relief; Brent under $97 would extend it. … Show more
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
Treasuries offer diversification from AI risk because a tech decline would drag credit-sensitive bonds down with it. Stick to Treasuries rather than credit for that hedge. 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
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
AI borrowing is pushing rates up because hyperscalers will pay any price for money, so rates must keep rising until they hurt price-sensitive borrowers. Amazon, Alphabet, Meta and Oracle sold about $194 billion of bonds by early July, 79% more than in all of 2025, and the 10-year yield touched 5.33%, the highest since 2002. Julien Garran warns a downturn may not lower long yields much, with big deficits everywhere while Japan and China step back from Treasuries. 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
