USA Treasury Bills

On the US 10yr, the valuation just doesn’t make any sense for investment. It always sets alarm bells ringing when the justification means that “normal investment logic” goes out the window. Let’s not forget the yield was 3.6% less than two years ago, the clamour for “safe havens” and a “sure way to protect capital”, has surely led to the reverse being true.

The average 10yr yield is normally 4-5%, a “PE” of 20-25, reasonable enough for a guaranteed return. That “PE” today is 63. Something close to 3 times overvalued against the average, driven by a frenzy to “park capital” while the Fed is easing. If stocks were this expensive, it would be 1999.

Corporate bonds meanwhile are as expensive as they’ve been since the 1950s. BAA rated US companies will now kindly give you the same return (4.5%) for 30 years as US treasuries normally do for 10 years, something investors sneer at (even for a guaranteed return) during a bull market.