Run for Cover! Investors Flee to U.S. Treasury Bonds

Despite the Fed’s talk of a rate hike as soon as next month, long-term U.S. Treasury yields continue to trend lower as investors seek the safety of U.S. Treasury bonds.

This scenario was magnified Friday, and even more so today, as global equity markets sold off and the commodity bubble continued to deflate.

As Harry warned on Friday afternoon in his special update, the crash is indeed happening. This morning there is more evidence of that. China’s Shanghai Index crashed another 8.49%, Japan moved sharply lower, Europe followed suit, and U.S. stocks struggled to come off a major morning selloff.

This sent yields on the 10-year U.S. Treasury bond below 2% for the first time since April (though higher as stocks picked up a bit through the afternoon).

This is following a trend change we noticed back in mid-July, when I issued a trade alert to Dent Digest Trader subscribers now up nearly 100%.

When my short-term system identifies trading action that moves sharply beyond the current trend, it alerts us to take a position to catch the move back to the normal range. It works about 70% of the time, and when it’s right, we make our money quickly. We’re out of the market in less than two weeks.

But sometimes, like in mid-July, the trend itself changes. Investors turned to the safety of U.S. Treasury bonds as low commodity prices began pressuring stock markets around the globe – especially in emerging markets, whose stock prices are directly linked to commodity prices.

So, we caught this trend change and have been benefitting from it ever since.

When my system sees this kind of trend change, we position to stay in the new trend for several months. It takes more time, but the reward can be much greater than with the short-term trades. There are fewer of these trades as the trends they’re riding can take a while to peter out. For that reason, the average winning trade can take as long as four months. But like I said, the payout is better.

As the global stock market rout continues, Dent Digest Trader will continue to benefit from the move to U.S. Treasurys.

Lance Gaitan

Lance Gaitan
Editor, Dent Digest Trader

Harry Dent, a Harvard-educated business strategist and best-selling author, reveals why and when gold prices will plummet. Subscribe for free right now to read his latest report, Gold Will Fall to $700/oz.


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Categories: Bonds

About Author

Lance Gaitan graduated from Franklin University in Columbus, OH with a degree in Finance. After graduating and working as an auditor for an insurance administrator as a number of years, he attained his securities license. He then went to work as a broker for a small firm and during the mid-1990’s Lance managed the futures trading desk for Piper Jaffray, a large regional brokerage firm based in Minneapolis. After migrating to Florida in early 2000, Lance founded a futures trading firm, GSV Futures, specializing in retail commodity trading strategies. Lance sold that business in 2006 and joined Harry Dent, Jr. and Rodney Johnson at Dent Research shortly thereafter.