Better Late than Never

Trade: I took a full position in 30-year Treasuries today at a 4.25% ytm. There are many who expect the oncoming deluge of Treasury supply (over $550 billion this quarter) to overflow the demand. However, I believe that long term, Treasuries will keep their strength as long as deflation continues and the dollar remains strong.

We also have a continuous creation of new demand as the rest of the world races each other to see who can get to a zer0-interest-rate-policy first. Just this week, the Bank of England cut 150 bips, the ECB by 50 and the Swiss National Bank by 50 as well. In Germany, factory orders dropped by 8%. 8%?!? And there won't be demand for Treasuries? Short-term, I am waiting to see what the employment report shows tomorrow. If it's real bad, look out below, stock market. The Treasuries will take off. If it's a mild report, then it may take a little longer. Either way, I expect yields will drop below 4% for the third time this year. When they do, I will reevaluate my position and decide whether or not to cash in.