Friday, January 4, 2013

Yield Curve Steepening Part 2

I thought it may be illustrative to see where long rates may be heading, that is if the signals in the funds discussed in part 1 turn out to be correct. The below chart shows the track of the 30-year treasury bond rate and the price of the TBF or the Powershares 20+ year short treasury fund. The correlation appears fairly tight. This leads me to conclude that a price target around the March 2012 high would result in a long bond rate of about 3.5%.

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