One word: overextended. That is, government bonds.
This site has mentioned before that all the gloom that has been perpetrated by the media may not be so. Or not as much. Some indicators -under the hood- have been flashing alerts that economies around the world are not moving backwards. Case in point, the multiplicity of breakouts for base metals. In addition, it was said that some shipping indexes such as the “containers” one – CONTEX- which relates for the most part to the shipping of finished goods have been indicating that international commerce was alive and thriving.
Now, government bonds are starting to look stretched. Take a look at the charts for Barclays Capital U.S. 7-10 Year Treasury Bond index and TLT, Barclays Capital U.S. 20+ Year Treasury Bond index. This last decade, only once IEF
IEF: Double top anyone?
reached the 98+ level and that was during the 2008 meltdown. Same case for TLT, which as of yesterday has broken out above the upper resistance line that contained its advance for the last 10 years, except once during 2008.
Question is, where will the money flowing out of bonds will land? Correct. It is not going to be in my backyard. The saavy investor should also wonder if stocks are cheap here and gold has become a bit stretched. I think I have the answer.
TLT: Will we see money flowing back into stocks?
