With rising rates depressing bond prices, some investors may think ditching U.S. Treasury notes is a wise play. Some strategists are taking the other side.
Treasurys will soon fall into favor, Gina Sanchez, CEO of Chantico Global, told "Trading Nation" on Friday. Here are her reasons why.
• In a traditional economic expansion, interest rates increase to keep the economy from overheating through rising prices or inflation. However, we are in a far-from-traditional economic expansion, as we're near the tail end of the post-crisis recovery.
• Many are concerned that as the Federal Reserve normalizes interest rates from rock-bottom levels, Treasurys should be avoided at all costs because equities are a better source of growth. However, that's more of a "phase one" of a recovery.
• A so-called phase two occurs when the benchmark 10-year Treasury yields begin to surpass dividend yields; that's where we are now, making the 10-year yield attractive at this juncture.
• Moreover, continued geopolitical concerns add further support to Treasurys, a classic safe haven play.
Bottom line: Several fundamental factors make U.S. Treasury notes attractive here, Sanchez says.