My Bull Thesis for Bonds Has Never Looked Stronger

Say what you want about my feverish hankering for bonds, via TLT. This singular position is up more than 17% for the year, absolutely poleaxing everything in its wake.

Repeatedly, I hear people telling me ‘get off the ark man, it’s gonna sink.’

Fuck you, no it’s not.

The bull case for bonds has never been stronger. Central banks are in easing mode, which bodes well for bond buying lunatics. The more QE, the lower yields go. Over in Japan, the JGBs are at record low yields.

Over in Germany, yields cratered by more than 5bps to -0.08%.

You do understand this is all interconnected, right? Arb players will continue to ping off JGBs to Bunds and then to Treasuries. This is how this trade has played out for the past 8 years and it’s how it will continue to trade in the future.

What if the Fed hikes rates?

It will only affect short dated bonds, the 2yr, not 30yr treasuries. As long as Japan and Germany wallow in negative territory, there is a profound bull case to be made for our very cheap and very attractive bonds.

I will remain long TLT, with 25% of my assets, until the yield curve inverts.