Technical analysts would be hard-pressed to ignore a combination of factors that appear to favor iShares 20+ Year Treasury (TLT). First, this exchange-traded tracker appears to have strong support at 52-week lows set back in August. Second, TLT recently climbed above its intermediate-term trendline (100-day). While the price of TLT may have crossed above its 100-day moving average back in October before faltering, this time the slope of the line itself appears as though it may turn positive.
While I will not be investing in TLT at this time, a string of questionable economic data points and/or poor fourth-quarter earnings could result in surprisingly robust demand for long bonds.
2. Safety Seekers Love China. In October 2013, I recommended that currency ETF enthusiasts take a look at WisdomTree Chinese Yuan (CYB). The yuan/renminbi has risen steadily since 2006 against the U.S. dollar. Even though China monitors the extent that it will allow its currency to appreciate, there's little reason to expect any changes to the basic dynamic; that is, the U.S. is maintaining an incredibly loose monetary policy here in 2014 when compared with China's concern about inflation.
In essence, even those who believe the dollar will strengthen against most developed world currencies in 2014, safe haven seekers believe that a portion of their cash should be in China's currency.
In November, I offered another compelling way to play China's currency as well as the safety of its government bonds. PowerShares Yuan Dim Sum Bond (DSUM) provides a reliable income stream on a fixed income portfolio with short-term maturing bonds. Funds like iShares 1-3 Year Treasury (SHY) may provide a measure of safety for its 0.3% annualized yield, yet DSUM serves up closer to 3% with probable capital appreciation.
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