May be not. The recent rise may be to milk the cow (The FED) high and dry.
I think America is doomed because it is an undisciplined nation. The FED and the govt think that jobs can be created by money printing. I think that the more money you print, the more money is taken abroad and even more jobs will be taken away. There will be a situation that America resembles Zimbabwe or Argentina or India. A nation which refuses to tax the rich, which refuses to honor the working people, which out sources anything and every thing and issues as many L1, H1, J1 visas is doomed. Higher and higher deficits and higher and higher debt and higher and higher interest rates will be the order of the day in the future.
^TYX is reading 3.89 (-.02) while 10 year is reading 2.93 (+.05) ! What is happening? One explanation is that the Fed is buying 30 years today and tomorrow they are buying 10 year (heavily)! Fantastic job by the front runners!
You are likely to wait for ever! Not only that, during the wait, you might buy stocks (possibly FB, TWTR, AMZN etc) and get wiped out. 30 year bonds at 4% yield may be a decent bet with low inflation.
I think that on Friday, there was a lot of bond buying by the FED. Then there was some chatter about deflation in Euroland.
The message got cut off.
If 30 year yield is at 4.00%, then the price of this bond would be $95
If 30 year yield is at 4.25%, then the price of this bond would be $91
If 30 year yield is at 4.5%, then the price of this bond would be $87
If 30 year yield is at 4.75%, then the price of this bond would be $84
If 30 year yield is at 5.00%, then the price of this bond would be $80
If 30 year yield is at 5.25%, then the price of this bond would be $77
My advise is to go for TLT 1016 $90 strike cash covered puts. The yield will be like 4.25%. Risk is if TLT falls below 90 in which case you would have lost all the premiums and start to loose principal; very unlikely to happen given the deflationary environment. TLT $90 translates to about 4.75% on 30 year bonds. If indeed TLT comes down below 90, you would have a chance to buy 30 year bonds and hold for ever. If TLT falls below $90, it is very likely that the stock market collapses sooner than latter. Of course the risk on the other side is TLT may run up; in which case we are all beating the bush about bonds loosing value.
For the question of 30 year bond loosing value: A 3.75% coupon 30 year bond will have the following prices:
If 30 year yield is at 2.50%, then the price of this bond would be $126
If 30 year yield is at 2.75%, then the price of this bond would be $120
If 30 year yield is at 3.00%, then the price of this bond would be $114
If 30 year yield is at 3.25%, then the price of this bond would be $109
If 30 year yield is at 3.50%, then the price of this bond would be $104
If 30 year yield is at 3.75%, then the price of this bond would be $100
Even Larry Kudlow seems to agree that QE infinity seems to screw up the savers and make the rich richer leaving behind the hardworking alone. This woman Janet Yellen would destroy what Ben is leaving as unfinished. Of course GOP has done the other half via tax cuts. Whichever way you look at it, ordinary savers are left out high and dry.
All of us are being swindled by the captains of our industry. They have taken the technology, the money (provided by Fed cheaply), the fruits of our labor out of the country. Did you see this guy in the hoody trying to say that H1B visas must be increased because we are not talented? Far further from truth. He wants cheap labor who will say "Yes" for everything. Anyway the way I see is this: Captains of industry want globalization to the death, they want to hire labor from everywhere, they want to pay zero taxes, they want to take the factories abroad... What is there for American labor and middle class? Nothing. We will have our sons and daughters to be sent to fight these wars (including Obama's Syria war) cheaply. Actually, I hear that even these will be outsourced. No income, no taxes, no revenue for the government, higher debt, higher interest rates and this is what I see.
You may be disappointed. By then, the economy might have tanked and people may be unemployed and government may be confiscating your money and gold. 30 year yield is not going above 4% for a very long time.
My school of thought is that 30 year is a long period. At least for the time being the earnings yield is say double of the 30 year yield. So many people go for stocks. Secondly, more and more QE makes the Fed balance sheet ugly. These may have to be unwound either by an explicit sale or "by holding to maturity" at which point of time, new buyers have to come in and hence rates will go higher. But I think that 4% yield on 30 year is a good one worth investing for long term.