The Risk in the Treasury Bond Market is…

The risk in the Treasury Bond/Note market is in not having any Treasury bonds. At least that is what the sentiment backdrop is saying. I hold a ton of SHV (income paying cash equiv.), but also IEI (3-7yr) and IEF (7-10yr). This despite much energy being put into media promotions telling us that the bond bull is dead. The bond bull will be dead when it is dead, but I can assure you that technically speaking at least, it is very much on its long-term trends as of today.

I think it is very interesting that the 10yr yield is just scraping the underside of our 2.9% target today…

10 year yield

…while the sentiment backdrop for the 10yr Treasury Note is very bullish (bearish for the yield) on a contrarian basis by both public sentiment and Commercial (lack of) hedging.

From Sentimentrader, the public hates itself some 10yr Bonds…

10yr bond

And as is the way of the markets, Commercials love themselves some 10yr’s, taking the opposite side.

10yr hedgers

Also interestingly, the 30yr is in a more middle ground sentiment situation, but so too is its yield still below target (currently 3.1% w/ a target of 3.3%).

So who’s right, the dumb money stewarded by media promotions featuring the Bond King and Ray Dalio or the commercial entities that are usually right at important turning points?

We’ll find out when the limiters on the 30yr & 10yr either give way to the hype of the new bond bear market or, err… they don’t. Meanwhile, keep the cart behind the horse. Until these limiters break this is still a good portfolio balancer, at least.


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