Market When Open, Thursday 22 May
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Fear And Loathing In New York
by Alex King, CEO, Cestrian Capital Research, Inc
I think there are two ways to think about the direction of US government bonds at present. The first is that of the End Of American Exceptionalism narrative which basically says that the treasuries market is now unreliable, debt levels are unsustainable, the Big Beautiful Bill is in fact merely a reference to the $4Z/yr US government annual interest payments, etc etc. All of which is an instinctively appealing narrative. Of course it is the end times! All the signs are there!
The trouble is, that makes this quite hard to explain:
Personally I am long US government bond ETFs; I own $TLT, $TMF and the EU UCITS ETF $DLTA with a sizable allocation. I know all the reasons why the 10yr yield is going to 10% and why every third party nation around the world is going to sell their treasuries and why Mr Buffett isn’t going to save America either. But I also see what looks a lot like large investors slurping up bonds at two-decade lows whilst the news is unceasingly miserable and I think … well, I think the Accumulation Bros have it.
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