Vanguard Extended Duration Treasury (EDV). In 2013, few asset classes suffered as greatly as long-dated Treasury bonds. Since the Federal Reserve began tapering in December, though, funds like EDV and Pimco 25 Year+ Zero Coupon (ZROZ) have been extremely successful in the exchange-traded universe. I explained in December and early January that the deceleration of interest rate manipulation by the central bank of the U.S. would actually increase financial market uncertainty, likely sending many investors back toward traditional safe havens.
Additionally, the technical picture supported the notion that prices were bottoming out. Today, EDV is receiving remarkable support at its 200-day long-term trendline; meanwhile, a “golden cross” by the 50-day moving average appears inevitable. Are there other reasons that investors seem to be bucking the conventional wisdom that rates had to go higher?