Buy Long Bonds (Another Opportunity To Fade The Fed)

Takeaway: We say keep buying Long Bonds (TLT) and ignore hawkish chatter from regional Fed heads.

Buy Long Bonds (Another Opportunity To Fade The Fed) - ust 10 5 2

 

The market is giving you another opportunity to buy LONG BONDS ($TLT).

 

Yesterday, Richmond Fed head Jeffrey Lacker said he sees a "strong case" for raising interest rates. He even suggested rates could rise a lot. The market took him at his word. The 10-year Treasury yield is at 1.69% today. 

 

As you can see in the chart below, with every rate hike freakout (rising yields) it's been a great call to buy bonds. In other words, the Fed has wanted to hike rates all year but we continue to get #GrowthSlowing data. As a result, the Fed takes rate hikes off the table and bond yields fall. (TLT is up 12% year-to-date versus 5% for the S&P 500)

 

In short, stop hyperventilating. Stick with what's worked all year.

 

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