Andy Heilman
Principal Owner of MH & Associates
Long-dated US Treasuries look like a good hedge against rising rates, which at some point could crash the stock market. Duration on the 20-year Treasury has come way down, so another 100 basis points higher in yields would mean about an 11% price decline, or roughly a -5% total return. That is small compared with the decline equities could suffer. 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 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
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
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
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
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
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
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
US Treasuries remain unattractive despite retail bond-fund buying: Fidelity's Jurrien Timmer reports end investors accumulating bond funds, while retail buyers risk becoming exit liquidity before the debt cycle capitulates. Rising debt and debt-supply-led inflation are expected to push long-end yields higher even after the midterms. Junk-credit stress adds to the risk of a wider debt-market selloff, leaving bonds a risky equity-crash hedge. x.com x.com x.com x.comÂ
Long-dated Treasuries now pay enough to beat gambling on leverage: a 30-year Treasury at 5.60% turns $5 million into $280,000 a year, about $23,333 a month, for 30 years without touching a stock or watching a chart. x.comÂ
