The Next Collapse is in Long Term Treasuries

Peter Grandich,

This week, the Long Term Treasury Bond ETF (TLT) showed a massive breakdown of long term support and the 50 day moving average. Selling is very enthusiastic as investors are cautious over the Fed’s commitments and exiting strategies from purchasing long term debt. This chart shows demand is considerably weakening. Investors who are looking for options to protect themselves from a decline in U.S. debt and a rise in interest rates should use (TBT) which is the inverse ETF of TLT, meaning that it will go up as long term yields move higher. Already emerging markets are protecting themselves from a decline in treasuries by diversifying away from U.S. debt and into natural resources, which I believe will continue throughout 2011. Investors are concerned about decreased purchases from The Fed and higher interest rates. This could continue to put pressure on the housing market, where mortgage rates are tightly linked to the yields on long term government debt.