Leader Of The Pack

German and Japanese 30-year Treasuries are trading around 1.3%, while U.S. Treasuries are at nearly 2.9%. That’s not going to last is all I can say. Draghi and Kuroda are trying their best to export deflation to the U.S., and they are going to succeed to some extent. A race to the bottom is underway.

IMO, the horse to own is long Treasuries or equivalent government-guaranteed long bonds, such as Fannie and Freddie’s mortgage bonds. A move to 1.3% from here would give a better than 50% gain in long Treasury zero-coupon bonds.

The Dow is up 300. But commodities are down. Treasuries are up, too. That’s an ominous divergence.

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