Making Money Alert
A Flight to Safety
05/05/2010
In the midst of the current equity sell-off, we’ve seen a big-time flight to safety in U.S. Treasury bonds. The chart below of the iShares Barclays 20+ Year Treasury Bond fund (TLT) clearly illustrates the heavy money flow into Treasuries during the last couple of weeks.
This move should come as no surprise to you, as money has a way of seeking safe harbors in times of rough waters. To be certain, bond and equity investors in Europe don’t want to tread those raucous seas right now, so much of that capital has made its way across the Atlantic and into bonds.
How much longer this bond bull can last is anyone’s guess, but I think that as long as the risk is perceived to be too great overseas, long-term Treasury bonds will remain above their 200-day moving average.