U.S. Treasury exchange traded funds are rallying on European debt fears as five-year yields drop to record lows. Stock ETFs, however, are broadcasting a more optimistic outlook. So who is telling the truth — equity or Treasury ETFs?

The iShares Barclays 20+ Year Treasury (TLT) has gained about 3% over the past week. The bond ETF has been trading in a range since the risk-off spike over the summer and is currently hovering around its 50-day moving average.

Treasury funds were among the best-performing ETFs last year on the safety trade. However, many high-profile investors and portfolio managers have been predicting higher yields, which would hurt bond prices. [Treasury ETFs on the Precipice]

Treasury yields have been pushed to historic lows on the Eurozone debt crisis and worries over a double-dip recession.

“Overall, U.S. Treasuries are offering negative real returns, except for the long bond, when adjusted for inflation, as investors are willing to sacrifice profits for safety in today’s uncertain climate,” according to Wall Street Sector Selector.

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