A lot of people are scratching their heads wondering what the heck is going on with the 10-year Treasury. We're not. In case you missed it, the 10-year yield hit 1.83% earlier today. This ... after declining from 2.27% when the Fed hiked interest rates in December.
There's a simple explanation.
Here's analysis from Hedgeye CEO Keith McCullough in a note sent to subscribers earlier this morning:
"I don’t want you getting piggy with the 10yr UST at 1.83% - it’s been a great start to the year (long the Long Bond), so book some gains after this epic move towards the all-time lows (in yields) – “expensive” Long Bond gets more expensive as A) Deflation persists B) Growth Slows and C) German 10yr 0.29%, JGB 10yr 0.06%, and Swiss 10yr -0.33%."
Our Macro call on this has been spot on. That's why we've been bullish on Long Bonds since we added it to Investing Ideas in August of 2014. Here's how it's performed since then:
We're sticking with Long Bonds. It's been the best contrarian Macro call around especially based on where we think the U.S. economy is headed: #Recession.