Three Headwinds that Will Keep Rates High

Michael LebowitzAdvisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

I have been vocal that long-term Treasury bonds are an excellent investment at current yield levels. However, timing the purchase of bonds is difficult because three headwinds are keeping rates higher.

Acknowledging the headwinds to my trade idea is an important disclosure, given how often I voice my bullish bond opinion.

First, though, I remind you why I like bonds.

My Simple Case for Bonds

The economic and inflation trends of the last 30 years will continue. That is it! That is my simple and concise thesis for why bond yields will be markedly lower in the future.

Pandemic-related fiscal and monetary stimulus generated above-trend economic growth and high inflation. Consequently, bond yields spiked to levels last seen 15 years ago, as shown below. They also broke the downward trend persisting for 30-plus years.