Still holding the TLT long, 100 even 117+I am still holding the TLT long, not because I have a large position, but rather because I am constantly trying to objectively analyze and share with you.
Let’s explore the US Treasury Actives Yield Curve today:
Of course, when the rate was 5.5%, it was much more inverted. Today, we already have a significant divergence between the money market and bonds. From notes to 30-year bonds, our curve is mostly normal (with the exception of the 20- and 30-year bonds).
However, the market still cannot fully allocate in short bills. Nevertheless, this is a huge signal that the market is expecting just another series of rate cuts.
At a 4.75% rate, under other equal conditions, it is normal for the market to quote 20+ year bonds in the 4.6-5% range, but it is not normal for this to happen in an inverted curve.
I do not rule out that the yield on 20+ year bonds is much closer to 5% than 3%. But I cannot disagree that sooner or later we will witness the approach of the 4% boundary, which in turn implies TLT moving to the 100 level.
The long-term debt market likes at least a 1-2 year stable outlook, which will be achieved during the formation of Trump’s cabinet.
As the Fed already mentioned in its last meeting, it will try to maintain independence. I believe that Trump’s administration will not directly intervene in the Fed’s affairs. At the same time, the Fed will need to act in future rate cuts, particularly by cooling the labor market and stabilizing inflation.
It is clear that no significant changes will occur until the December meeting, but it is certain that the market will at least see the future administration’s outlook, and this is already a crucial event that will instill confidence in the long-term debt market.
Of course, there are several fundamental reasons that could be discussed in detail, but not today.)
So, TLT towards 100."
