Courtesy of Doug Short.
Understandable concerns surround the debt ceiling debate and the question of whether U.S. government debt will be downgraded. In general government bond players are pretty savvy investors. If these bond players thought that U.S. government debt was going to be downgraded, what would they do? What would you do if you thought something bad was going to happen to something you owned? More often than not, investors would sell it.
Well the exact opposite is happening in the Government bond market. Investors are not only NOT selling bonds, they are buying them up like mad, driving yields through support, inside of the 18+ year falling channel, on the 30-year yield.
The decline in yield/rally in price, in the face of the potential default, more likely is a reflection that investors are more worried about a slowing global economy than anything else, looking for a safe haven.
Speaking of safe havens, Gold and the Swiss Franc (FXF) continue moving higher inside of quality rising channels, as investors looks for safe places to park their monies in a time of global concerns. Many feel the U.S. Dollar is a safe place to stash monies in a time of concern, yet when it comes to 2011 performance, the Dollar is down 5% and the Franc is up over 15%!
(c) Kimble Charting Solutions
blog.kimblechartingsolutions.com
