1. A Turnaround For Longer Maturity Bonds? The advice that many financial professionals have been giving has been to avoid the long end of the bond curve and embrace shorter maturity bonds for the fixed income portion of an allocation. Admittedly, that’s the approach I have taken with my clients for the better part of a year. By the same token, I am watching to see when — and under what circumstances — a “flight to quality” trade returns.
Technical analysts would be hard-pressed to ignore a combination of factors that appear to favor iShares 20+ Year Treasury (TLT). First, this exchange-traded tracker appears to have strong support at 52-week lows set back in August. Second, TLT recently climbed above its intermediate-term trendline (100-day). And while the price of TLT may have crossed above its 100-day moving average back in October before faltering, this time the slope of the line itself appears as though it may turn positive. While I will not be investing in TLT at this time, a string of questionable economic data points and/or poor Q4 earnings could result in surprisingly robust demand for long bonds.