Thursday, December 18, 2014

Long Term U.S. Treasuries Are Having An Incredible Year

It may surprise many Americans who pay much closer attention to the stock market ticker, but entering the trading day yesterday long term treasury bonds were having their 5th best year in history, up 28.2%.

This return has come mostly through appreciation as bond values rise as interest rates fall. We recently discussed how every financial forecaster polled by Barron's predicted higher stock prices in 2015. What we did not review is that every one of them also predicted lower bond prices (higher yields).

While I think both asset classes are at nosebleed dangerous price levels (I would rather own foreign assets, commodities and cash), sentiment appears to favor owning treasury bonds over U.S. stocks in the new year.


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