Stocks continued their run this week as investors once again embraced risk after the announcement of a preliminary European debt deal. Since September 22, the SPDR S&P 500 ETF (SPY) is up 14% while the Barclays Capital 20+ Year Treasury Bond Fund (TLT) is down 10% over the same time period.
After a steady rise through the summer, bonds have given up ground to stocks as investors react to US plans for quantitative easing. Since August 16, the Barclays Capital 20+ Year Treasury Bond Fund (TLT) has declined 10% with stocks rising 11% over the same time period.
The lackluster economy has stalled stocks and sent investors in search of safe returns. As a result, one of the best performing asset classes in recent months has been long term treasuries.
Investors who fled to the safety of long term treasuries at the beginning of the year have to be second guessing themselves. Since January 2, the Barclays Capital 20+ Year Treasury Bond Fund (TLT) is down 22%.