Tuesday, May 18, 2010

Treasuries Rally

The accompanying chart of the 30 year T-bond shows a rapid collapse in yields concomitant with the collapse of the euro. The current implied yield per Bloomberg based on Asian trading is 4.21%. The yield a mere 6 weeks ago was over 4.8%: quite a drop.

There is first support/resistance at 4% even, seen in summer/fall 2008 and then fall 2009. (Click on chart to enlarge.)

Despite the make-believe nature of Federal finances, I am long various zero-coupon Treasuries based primarily on the ongoing structural bull market in Treasuries of all securities and would look to be a seller of the longest maturies if rates approach 4%.

The selling in certain stocks is looking just a bit panicky. Jim Rogers is fessing up that the collapse in the euro has taken him by surprise. He doesn't admit to being wrong often. He must have company.

In the meantime, the Gallup polling is showing its best hiring/not-hiring result in over 1 1/2 years at +10. This is still a level not consistent with a declining unemployment rate, however, given ongoing population growth and the ongoing disappearance of companies that no longer get sampled. The trend is OK, though, and while many stocks have horrible 2-year and longer-term charts, others such as several highlighted here over the past months and year remain in record territory, above their 2007/8 highs, have simply corrected overbought conditions from 1-2 months ago, and are looking fundamentally and technically ready for a bounce.

Companies that do little or no business in Europe may be best amongst these.

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