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Below is a brief excerpt transcribed from Monday's edition of The Macro Show hosted by Hedgeye CEO Keith McCullough.

McCullough: Why We've Been Bullish On Treasuries Since October 2018 - 07.31.2018 Bond Long Bond cartoon

Lets talk the 10 Year Yield down at the low end of the range.

A lot of the reasons why markets bounce is because they go to the low end of the range. Don’t forget Oil came from the low end of the range as well, and so is the 10 Year Bond Yield this morning when it was up 7 basis points, to .66, to 5 basis points, to .64.

All the 10-year yield is doing is bouncing within a bearish trend.

Now, for those of you who are new subscribers, we’ve been bullish on Treasuries across the curve (2’s, 10’s 30’s, ect.) going all the way back to October 2018 as the U.S. economy has continued to slow. So I’d say we’re pretty good at riding bull markets. Don’t forget the only big bull markets that are currently left are in both Treasuries and Gold.

We did see the Move Index (i.e. Treasury volatility) come down on Friday, and that’s a big factor in buying the dip both Treasuries and Gold.

When we see bond market volatility come down on the Treasury Volatility side, you can also see the Volatility Index of the 10 year Yield came down to 6 from 15! That is a good thing.

Mathematically, when volatility starts to break down you can have more confidence in buying those assets at the low end of the risk range. Treasuries and Gold remain numbers 1 and 2 in terms of global asset allocations in terms of markets that trade.  

McCullough: Why We've Been Bullish On Treasuries Since October 2018 - 4 6 2020 12 05 37 PM

McCullough: Why We've Been Bullish On Treasuries Since October 2018 - 4 6 2020 12 06 03 PM