Right after I posted “Long Bonds Enter The Blowoff Stage,” Jeff Gundlach expressed some similar concerns to those I shared in that post:
— Jesse Felder (@jessefelder) July 6, 2016
I think one thing he might be looking at, beyond what I wrote about Wednesday, is the chart below which shows how rare it’s been over the past 30 years to see the 10-year treasury note yield less than the current rate of inflation as measured by core CPI:
Inflation-adjusted yield of 10-year treasury note: pic.twitter.com/sylhe6mba9
— Jesse Felder (@jessefelder) July 7, 2016
Gundlach may also be concerned about the rising euphoria I mentioned in that earlier post and Tom McClellan recently demonstrated in the chart below:
The retail rush into T-Bonds cannot be good for the blowoff's longevity. pic.twitter.com/KLpaisEiNv
— Tom McClellan (@McClellanOsc) July 8, 2016
Tom also brings up another interesting point in a post of his own this week. The long-term cycle may soon be ready to turn.
— Jesse Felder (@jessefelder) July 8, 2016
If I wasn’t clear enough in that last post, my point is the risk/reward equation in buying long bonds today just isn’t what it was 18 months ago. Fundamentals, sentiment and technicals now suggest risk far outweighs potential reward.