Tainted Alpha

I would always go with Goldman Sachs. Since the sell side analysts and mainstream  media are on the story, probably the majority of a downward move has been done. Bloomberg story: Morgan Stanley Sees 5.5% Note as U.S. Faces Deficits. As I already wrote in Shorting Long Dated Treasuries, I believe this is one of the potentially great trades, but in near term I am with the deflation camp. My view is that combined FED efforts of keeping mortgage rates and weak company pricing power and output gap would keep rates low for some time.

Chart 1. 30-Year US Treasury Bond Price

Chart 2.  30-Year US Treasury Bond Yield

U.S. Treasury Bonds

This entry was posted on Monday, December 28th, 2009 at 7:21 am and is filed under Markets. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.