Pro: Why I’m Buying Bonds

Chris Ratcliffe | Bloomberg | Getty Images

Ten-year bonds have broken out of a consolidation pattern and appear ready for more gains.

Weaker-than-expected manufacturing data in both China and the euro zone have pushed Treasury yields lower, and the 10-year yield now seems poised to test recent lows of 1.58 percent. Since the market remains unsure of the roles of gold and silver as safe havens, U.S. Treasurys should attract a disproportionate share of "risk-off" dollars.

One argument I hear frequently is that 10-year yields have limited downside, given their current level. However, this argument falls apart when you consider that the German 10-years yield 1.21 percent, which clearly underscores a thirst for perceived safety.

I have adopted a bullish bias in June 10-year futures at the current level of $133.10, with an upside objective of $134.07. On the downside, $132.24 would be a reasonable stop-out level.

Watch "Futures Now" Tuesdays & Thursdays 1 p.m. ET exclusively on FuturesNow.CNBC.com!

Like us on Facebook! Facebook.com/CNBCFuturesNow

Follow us on Twitter! @CNBCFuturesNow

Contact Futures Now

  • Showtimes

    Watch Futures Now Tuesdays & Thursdays 1p ET exclusively on cnbc.com!

Sponsor Links

  • CME Group brings buyers and sellers together through its CME Globex electronic trading platform and trading facilities in New York and Chicago.

  • Take your trading to the next level with a platform that lets you trade stocks, options, futures and forex all in one place with no platform or data with no trade minimums. Open an account with TD Ameritrade and get up to $600 cash.