- In the short term, if the market continues to rally, treasuries will do badly as people become less risk averse
- In the long term, the U.S. is taking too much debt and is going to find it hard to continue to sell treasuries
Not everyone will understand the first point so I will explain it a little further. People buy U.S. treasury bonds as a defensive play. That is, if you think the market is going down, you buy U.S. treasuries because there is little change the U.S. will default on its debt. The reverse is true too. As the market rallies, people look to take on more risk. They sell bonds so they can buy stocks.
I think the correction in treasuries is going to come fast and it is going to come soon. I now have a medium sized position in TBT and will look to get an even larger position in the next few weeks.