Current Bubble: Bond Bubble Believers

History shows that the 10-year Treasury and other government bonds could continue to go higher, sending yields even lower, according to technical analyst John Roque.

“There is a bubble in people believing there is a bond bubble,” said Roque, an analyst for WJB Capital Group in New York. “The rate on the 10-year is not even below where it was in March ’09 or December ’08.”

Google searches for “bond bubble” were nil for most of the year until the end of July, when they began to surge as investors began to worry it was beginning to be a crowded trade. Inquiries about the term are currently at their peak, according to Google Trends. An article about the bond bubble debate even made it to the top of the ‘Money’ section of the current issue of USA Today.

The 10-year Treasury yield hit a 17-month low below 2.6 percent on Friday as equities closed out there second-straight week of declines. The iShares Barclays 20+ Yr. Treasury Bond exchange-traded fund, meant to mimic the return in long-dated gov’t bonds, is up 18 percent this year, while the Standard & Poor's 500 Index is down four percent.

Roque notes that in 2008, Treasurys hit as low as 2.2 percent and that means Treasury prices have plenty of room to run before they top out. The technical analyst began his note to clients Monday with a chart showing the U.S. 10-Year Treasury yield steadily declining from 1800 (Yes, 1800) to a low of 1.67 percent in 1945.

“My point in going back that far was to show that rates don’t have to go up,” said Roque. “For the first 250 years, rates went down.”

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Trader disclosure: On Aug 23, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour owns (AAPL), (BX), (GOOG), (POT); Cortes owns (FCX), (SFD); Cortes owns (BHP); Cortes owns Crude Oil; Cortes is short (SPY); Cortes is short (XLF); Cortes is short Japanese Yen; Cortes is short U.S. Treasuries; Finerman owns (GOOG); Finerman’s Firm owns (HPQ); Finerman’s Firm owns (POT) calls; Finerman’s firm owns (WMT); Finerman owns (MOS); Finerman's firm is short (IJR); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Finerman’s firm owns S&P 500 puts; Finerman’s firm owns Russell 2000 puts; Terranova owns (AXP), (C), (BMO), (V), (POT), (OXY), (GLD), (FCX), (APA), (SU), (XBI)

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