Friday, October 25, 2013

Thinking On Long-Term Rates

The following comments are from the Street's interview with American Century's CIO and concerns long-term rates.


As you can probably guess, I think his assertion that the Fed will soon is just wrong. I am in the camp that weak economic data will likely push off any talk of a pullback in bond buying in to, at least, the second quarter next year, if not later. More so, it appears that long-term rates are more likely than not set to fall in the intermediate term. Just look at the Proshares Ultrashort 20 year treasury bond fund, whose price moves in correlation with yields on long-dated treasuries.


The fibs on this chart are suggesting that rates are likely to go lower, probably moving to the lows/high of the June/May. More so, the high volume swing point of May 22 will exert some gravity here now that a downtrend is in place. My guess is that the price of the TBT moves back into the mid-to-low 60's, corresponding with a 10-year treasury rate around the 2% level.

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