At the start of the month, with pessimism on the economy peaking, investors rushed to buy long-term Treasurys and dump stocks. For now at least, their timing couldn't have been worse.
In their rush for safety, many investors may have forgotten that Treasurys are far from risk free. This year's Treasury rally has been spurred by fears of a double-dip recession and deflation. With yields so low, the risks to investors may outweigh the rewards—especially if those fears fail to materialize.
Paul Guidone made this point in our conference call.