Treasuries - The New and Improved Toxic Asset?

Treasuries are now the New and Improved Toxic Asset. Everyone knows that they are overvalued, everyone knows their yields are absurd—yet everyone tiptoes around that truth as delicately as if it were a bomb. Which is actually what it is.

Bob

Bob,

The only opinion that matters is the market. The secular trends in the bond market suggest two things: (1) While the nominal (U.S. dollar)trend in bonds remains intact, it serves as a poor "canary in the coal" mine because of the devaluation bias (see chart below):

Long-Term U.S. Government Bonds Total Return Index (LTGBTRI):


(2) When the devaluation bias is removed, the secular trend in the bond market changes from up to down. Clearly, the canary in the coal mine died in 2001 - a long time ago.

Long-Term U.S. Government Bonds Total Return Index (LTGBTRI) to Gold Ratio:


Do not let consensus opinion - "what should be" cloud your perception of reality. As I have said many times before, follow the money.

The flow of capital has already begun its transition from the public to private sector (see chart below). This transition will be manifested into market trends (capital flows) yet to be recognized by the collective vision of consensus opinion.

Long-Term U.S. Corporate Bonds Total Return Index (LTCBTRI) to Long-Term U.S. Government Bonds Total Return Index (LTGBTRI):


Regards,
Eric