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Avoid U.S. Treasury Bonds!

 March 01, 2012 02:06 PM


Thursday, March 1, 9:25 a.m.

We have not been liking U.S. treasury bonds for several months. While they haven't declined to any degree neither have they gone anywhere, essentially moving sideways since November.

That shows up better in the short-term charts, with the pattern being one of lower highs and a usually negative declining wedge formation.

[Related -Dry Powder Doesn't Pay]

And now we're getting some company in our negative outlook for treasury bonds.

In his recent letter to stock-holders, and interviews on TV, Warren Buffett pretty much said dump bonds.

A few days ago Leon Cooperman, famed manager of Omega Advisors said, "The most widely traded instrument in the world is now U.S. government bonds. I don't think people understand how risky a US government bond now is with a 2% yield."

As the intermediate-term chart shows, just another decline back to its long-term trendline would be a 16% plunge in the value if bonds.

[Related -ADP: US Private-Sector Jobs Rise 190k In August]

At this point a 2% yield is not paying for that kind of risk.

Yesterday in the U.S. Market.

A fractionally down day in spite of the positive economic reports. And volume was significantly higher on the down day, with 1.1 billion shares traded on the NYSE.

The Dow closed down 53 points, or 0.4%. The S&P 500 closed down 0.5%. The NYSE Composite closed down 0.7%. The Nasdaq closed down 0.7%. The Nasdaq 100 closed down 0.4%. The Russell 2000 closed down 1.6%. The DJ Transportation Avg. closed down 0.2%. The DJ Utilities Avg closed up 0.1%.

Gold plunged a huge $92 an ounce to $1,696.

Oil closed up $.35 a barrel at $106.90 a barrel.

The U.S. dollar etf UUP closed up 0.8%.

The U.S. Treasury bond etf TLT closed down 0.6%.

Yesterday in European Markets.

European markets gave up earlier gains to also close down. The London FTSE closed down 1.0%. The German DAX closed down 0.5%.


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