Treasury Rally Augured by Aversion to Borrowing Costs

The real mavens in the U.S. bond market may be your next-door neighbors, and they say now's the time to buy Treasuries.

Twenty percent of Americans who say it's a bad time to buy a house cite high interest rates as a reason, according to a monthly survey of consumers by the University of Michigan in Ann Arbor. That threshold has been exceeded five other times since 1988, each followed by a rally in Treasuries.

While more than 80 percent of the economists surveyed by Bloomberg expect Treasury prices to fall this year, consumer attitudes suggest bonds are a bargain. The last time this many participants said borrowing costs were too high was in July 2006, just as 10-year yields started to decline by more than half a percentage point. Before then, consumers anticipated bond market gains in 1989, 1990, 1995 and 2000.

earnwithmicrocap.com