Bond Action

Treasuries have fallen precipitously lately.  Is this the beginning of the end for the great bond run?

It seems like treasuries are taking their queue from bunds which have been bid up from their ridiculously low levels over the past couple of weeks.  In addition it seems like there is a reflation of prices that is going on after the deflation that occurred at the end of last year.

There are still some points which make the case for low bond yields viable:

• QE in Europe is still taking place.
• Central banks around the world have short term interest rates at very low levels.
• The Greece situation may still call for a massive flight to quality.
• China seems to be slowing down and despite their efforts to kick the can down the road there is no telling when that party will be over.
• US economy has shown some unbalanced indications of recovery.

Still one cannot ignore the chart below.