The Fourth Bubble?
I got these charts from an e-mail that was sent to me by a company that was talking its book so to speak and promoting its services, but it is interesting nonetheless. There has been a lot of talk lately about how U.S. Treasuries are a bubble. These charts sure make it look like one to me. Anyone who believes that this is the case can play the eventual implosion of Treasures by purchasing things like Ultrashort 20+ Year Treasuries ETF (TBT).
I have absolutely no doubt that interest rates are eventually headed significantly higher. The timing of this happening is the question. I am of the opinion that it will take much longer than many people believe because that the U.S. government will do whatever it can to keep rates low for now. No one knows for certain when a dramatic rise in rates will happen. Has it started already? I am inclined to think no, but the yield on 10-year Treasuries has risen from a low of just over 2% to nearly 3% (it is sitting at 2.97% as I type this).
This is definitely something to keep an eye on. As the terrible recession that we are in cuts into Uncle Sam's tax revenue and massive spending packages are passed to stimulate the economy and bail out banks the government has been forced to bring record volumes of debt to market. The government has brought over $100 billion worth of short term debt to the block each week for the last few weeks. One has to think that eventually the market is going to choke on all of this paper.