It may seem surprising that so many investors and futures traders would be buying treasuries at a time when inflation concerns are increasing, and especially with oil approaching $144/barrel. However, I have learned over time that when the stock market is so beaten up as we have seen in recent days and weeks, investors will flee to treasuries, even though returns are poor. This drive yields even lower. Treasury prices and the resulting yields are below inflation. However, investors are so worried for the safety of their capital, they are buying treasuries solely as a place to park their money while they look for safer yields elsewhere. Safety trumps return! Counterintuitive or not, it is a fact. This daily chart proves the phenomenon. I have also learned to ignore fundamentals-related gyrations in the financial markets. Someone else will always have either better or more current fundamentals data than I, and fundamentals-related news often misleads. However, the charts don't lie. I can trust them to always show me the truth of what is occurring in the markets, regardless of what today's news trumpets to the financial world. This daily chart shows that for the past few weeks, treasuries have been trending higher (yields, lower).This daily chart for treasuries shows an uptrend at a time when inflation is becoming more and more unhinged. It seems counterintuitive that treasury yields, which move inversely to treasury prices, would move lower at a time that inflation concerns are growing. However, safety trumps yield in an environment of so much fear. Until investors feel comfortable buying stocks again, treasuries will remain the ultimate safe haven for capital.
