Don't give up and buy TLTWe have a new rate cut, congratulations! The Fed rate is now 4.5%.
What is happening in the market, and why does the effect of the rate seem to "work in reverse"? After all, TLT should have been above 100 long ago, especially after so many rate cuts.
Yes, that's entirely correct, so why are all our accounts in the red?
First and foremost—the most important thing—never sell U.S. Treasury bonds at a loss.
Second, the market is "inclined" or "disposed" to believe that the Fed is either lying or doesn't have a proper grasp of the situation. Due to domestic political changes and the effects of Trump's policies, inflation is expected to remain high for a prolonged period—potentially above 3%.
Even in that scenario, a yield of 4.7% or higher on 20+ year bonds remains attractive. More on that later, but in the real sector, following the elections, the Chinese yuan has already depreciated by over 5% against the U.S. dollar.
RIGHT NOW, the U.S. debt market is the most attractive market with its 3.1% economic growth.
