Given both the collapsing volume (see lower panel) and the sagging prices, treasuries are showing signs of a top. If the stock market collapses again, traders will quickly regain their love for treasuries, but if the stock index futures continue to show signs of modest strength, treasuries may continue to move lower despite the Fed's determination to lower the Fed Funds rate and to buy treasuries to artificially suppress interest rates. This has been a great run! Often, following a brief pull-back like that shown in recent days, the original trend will reestablish itself and the trend will return.
It amazes me, however, as Jim Rogers said on one of my blog posts yesterday, that anyone is willing to lend money to the U.S. government at interest rates that are below inflation. It is a sign of how desperate the times are! The amount of U.S. government debt is now so staggeringly large that I don't believe investors will ever be repaid. Don't be standing in the way when global investors run for the exits! The interest alone on the debt will probably reach $500 billion this year alone! Imagine how much could be done with that money if it didn't have to be paid in interest!
