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Is It Time For The Long Bond?
The stars may be aligning for the unloved long-end.
That's according to BofA's Michael Hartnett who, in the latest installment of his popular weekly "Flow Show" series, said the "4Ps" argue for getting "long the long bond." The "4Ps" are positioning, politics, policy and profits.
First, a little context. Bonds were beset at various intervals over the past two years by a hodgepodge of familiar bête noires, including inflation and concerns over fiscal profligacy. Late last summer and into early
Curve is going to steepen a lot more….
The direction of the front end is reasonably clear but risk/return questions on the back end are still somewhat open, given the expectation that the curve should eventually invert, the prospect of relatively elevated inflation long term, 4% plus yield on the 30 yr now, etc.
H-Man, I have been surprised that bonds have not received more attention. We saw the opposite effect when inflation was rising with Fed hikes, so now the pendulum swings to the other side. This is a good trade.