The Fed’s unprecedented levels of stimulus have indeed inflated risk assets and perturbed the natural equilibrium in a number of markets. Treasury bonds are no exception. In fact, the bubble in U.S. government bonds is long in the tooth and now starting to show cracks. 10-year Treasury bond futures lost 7% in a few short months as the financial media became obsessed with the possibility that the Fed would ease off the gas, reducing its monthly allotment for bond purchases. Here’s the short-term chart of 10-year Treasurys that I shared with you recently, as a bearish head-and-shoulders pattern was forming.
Posted on: Wed, 15 Jan 2014 00:00:01 +0000
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