The huge rally in Treasury exchange traded funds this week is screaming deflation and a desire for safety.

The iShares Barclays 20+ Year Treasury Bond (NYSEArca: TLT) was up about 1% following its 3% rally the previous session.

“The real story here was always the impact of the debt ceiling outcome on the real economy. And the bond market’s message has been loud and clear. Bond traders think this deal stinks for the economy and what they see is an anemic economy,” wrote Cullen Roche at Pragmatic Capitalism yesterday.

The Treasury bond ETF entered Wednesday’s trading with a 10.3% year-to-date gain, according to Morningstar.

Stocks were again under pressure Wednesday as the Dow shed more than 100 points.

Yields on the 30-year bond dropped to 3.8% as investors fled to U.S. Treasuries. Bond prices and yields move in opposite directions.

iShares Barclays 20+ Year Treasury Bond

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.