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Are Treasuries a Buy?

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  • Description

    Kevin Flanagan of Morgan Stanley Wealth Management gives his outlook for Treasuries.

  • Duration 2:57
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-- -- -- that they -- some -- so well unrest and protests happening over there we can take a look at some of the pictures coming out of Greece today.

Send even more money flooding and our markets right here.

Joining us now is Kevin Flanagan chief fixed income strategist at Morgan Stanley wealth management -- of course I'm talking about.

US treasurys -- -- one of the safest asset -- bond around the globe.

Do you think -- a rally in treasuries will continue and how low while the -- go on the ten year.

Well yeah I think what you're seeing is sort of the afterglow from the Fed's QE3 the ECB's action a couple weeks ago have -- by the boards and really we're going back to the root cause of the problem.

Over in the Euro -- so that safety trade comes back in which is why we were close to 190s after QE3 now we're close to 160.

So to get back to what you -- asking I think as long as you have the safety trade in place we could easily revisit the 139155.

Level that we saw this summer.

By the end of the year that where do you expect the -- to me on the ten there.

Yeah I think that you know some key uncertainties will go by the boards the election will be did you may be getting a better handle on the fiscal cliff so I wouldn't be surprised.

If we make this one last move down and you look at -- ten -- that's closer to 2% and 1%.

In terms of the markets and -- -- them fixed income market the treasury market does it matter to investors who wins come November.

-- cause we have built up this sixteen trillion dollar debt we are facing having to deal with.

Spending cuts and tax increases -- the end of the year is it is also much of that already baked and that.

Who wins November doesn't matter so much.

Yeah I think there is some truth to that but I do think the market at least in -- knee jerk fashion if you were to get a Republican sweep I think they'll be this.

Negative reaction in the treasury market that'll be a short honeymoon period where the expectation will be.

Things will get done we'll see perhaps some of the uncertainty removed and when you remove uncertainty that's not good for treasuries.

Not by any stretch the imagination terms of what you a year for expecting what we've already -- Happen in the tenure -- terms of the rally and the yield coming -- how much does the Federal Reserve -- get credit for that and what it is going to undertake because again.

Yet Charles Plosser of the one of the Fed banks kind of she -- down what Central Bank is -- Yeah you know I mean it's interesting if you talk I think to chairman Bernanke will tell you that the Fed has played a role in bringing treasury rates down but you know I think it's more of this safety trade and sort of a coincidence.

That the Fed had been buying at the same time this has been going on remember QE3 -- buying agency mortgage backed securities not treasuries.

Would you add to treasuries here Kevin quickly.

No I don't think so I think right here -- probably be a better seller.

A kind -- great -- -- you thank you something my bills.

Sort of to the point that -- they will I get Kevin thank you so.

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