I have come around 180 degrees from last summer, and I’m bullish on long bonds now. The trend is clear over the past 12 months. The yields are moving with stocks.  The old correlation still holds, despite the dropping dollar and recently soaring commodities. The final flameout for the dollar is coming, but not just yet.

Dropping US, UK and Swiss government bond yields signal deflation and depression. I think they are a great speculation, particularly the Swiss bonds, since the country and currency are strongest.

Whatever you do, I wouldn’t buy one of those inverse bond funds, except for an inverse junk bond fund (such as RYIHX). In Depression #1, Treasuries soared and corporates were decimated.  And clearly, municipals are burnt toast. Sucks to be a government that can’t print money (sorry, Panama).

How to play it? I like 2010 calls on TLT.