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Robust Demand For Treasurys May Be Ominous Sign

It seems that investor appetite for long-term Treasurys remains quite strong. And that could be a terrible thing.

What? That doesn’t make sense!

Although it might sound counterintuitive, that argument comes from one of the most widely followed and respected analysts on the Street. PIMCO’s Tony Crescenzi.

You’d think demand for Treasurys is a bet on America – a belief that we will come out of the recession bigger and better than ever – but it might not be the case.

In an LA Times article Crescenzi is quoted as saying that investors' appetite for long-term Treasuries could be a bad sign for the economy, if it's based on a desire to lock in safe fixed returns because they believe the economic recovery will be cut short.

And with benchmark yields sliding to their lowest levels since spring, Crescenzi is growing concerned.

A slide through the 4% level on the 30-year T-bond would suggest a "breakdown" of faith that the economy can sustain its attempt to rebound.

We were so intrigued we invited Crescenzi to join us on Fast Money. See the entire conversation. Watch the video now!


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