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All year long, consensus has been consistently wrong on bonds, arguing that rates were headed higher. Hedgeye has been on the other side of that trade. We have been advising our subscribers to buy bonds, that U.S. growth was slowing, and that yields were going to continue falling as a result.

In the video below CEO Keith McCullough discusses the positive correlation between the 10-Year Treasury yield and the direction of U.S. growth and how it is one of the key influences which will cause the 10-Year Treasury yield to surprise to the downside in Q3.

We wanted to know what you thought. Is the 10-Year Treasury yield heading higher or lower in Q3?

At the time of this post, 63% voted LOWER, 37% voted HIGHER.

Those who voted the 10-Year Treasury yield is headed LOWER reasoned:

  • U.S. economy's growth stocks have peaked.  2014 has been and continues to be strong for slow-growth stocks/entities/bonds for the foreseeable future.  Given the lack of substantive U.S. growth (sustained 3.5%+), monetary policy will continue to produce inflating costs in stuff and asset prices until it can't.  Currently, the Fed still can, so bonds, commodities, and slow-growth entities is where the market is positioning in this environment.
  • The world still sees the U.S. treasury’s market as the "best house in a bad neighborhood" and they believe the Fed will ultimately give in on the Taper.
  • That is what the bond market is telling us currently.  So unless, the Fed changes course in the next 90 days, the yield should remain flat to lower.
  • If last Thursday's job number can't get the 10 yr yield excited, I don't know what will.

Voters who said the 10-Year Treasury yield is headed HIGHER had this to say:

  • Inflation