Last Saturday's message showed that Treasury bonds have been doing better than stocks since the summer. That's still the case. This chart below shows a ratio of the the long-dated Treasury ETF (TLT) divided by the S&P 500 SPDRs (SPY). The rising ratio shows Treasury bonds outperforming stocks during December. The chart also shows that long-dated Treasuries have done better than stocks since mid-year. Part of the reason for the bond buying is growing fear of global deflation, which usually favors bonds over stocks. Treasury yields are also higher than other developed markets, which makes U.S. long-dated bonds more attractive to foreign buyers. A stronger dollar also makes U.S bonds more attractive to foreigners.
Merry Christmas and Happy Holidays everyone! See you in 2016.
- John
