About Me

Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Monday, June 20, 2016

Long Treasury -- Steaming Toward Overbought

US financial liquidity has been growing faster than the sluggish economy. Short rates remain at
nominal levels and the CPI has averaged less than 1.0% for months. So, bond market players,
both large and small, have been pushing the bond price ever higher with speculative interest
running very strong. The market is unsettled this week as traders await the Brexit vote on the
23rd. The bond price remains in a clear uptrend from the end of the Fed's QE program, although
momentum has moderated.  TLT

The TLT bond equivalent has recently broken out to new high ground, and a substantial inter -
mediate term overbought is developing. By long run parameters the Treasury market is vastly
overvalued, and further price progress hinges on a continued slow global economy with player
concerns occasionally heightened by real and contingent crises which could roil the world's
markets. Long Treasury investors are offered 2.5% currently to cover longer term interest rate
and inflation risk as well as future supply and currency risk. It would be presumptuous to say
that a top is right at hand, but history will eventually show that the market has entered a major
topping zone.

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