Jeff Given, a portfolio manager with MFC Global Investment Management, thinks the 10-year yield may test 3 percent, indicating a bullish bet on Treasury prices. He reasons that “investors are still skittish about what is going on in Europe… equity markets are likely to be fairly volatile [and]inflation is a story a couple of years out.”
The annualized core CPI in April was 0.9% while the yield gap between 10-year TIPS and Treasury notes shrunk to 1.83% in late May, down from 2.47% in January. These indicators seem to signal that the Treasury rally may still have legs yet. Use a trend-following discipline if you’re interested in these funds, though. [How to Follow the Trends.]
For more stories on Treasurys, visit our Treasury category.
- iShares Barclays 10-20 Year Treasury Bond (NYSEArca: TLH)
- PIMCO 25+ Year Zero Coupon U.S. Treasury (NYSEArca: ZROZ)
- PowerShares 1-30 Treasury Ladder (NYSEArca: PLW)
Sumin Kim contributed to this article.