BofA: THE MOST IMPORTANT CHART IN THE WORLD

Sam Ro | Aug. 18, 2012, 8:57 PM

Amid the ultra-low volatility in the stock markets, Treasury yields have quietly been on the rise.

Some have attributed the move to the Federal Reserve not announcing more bond-buying through quantitative easing.

But most have argued that it is due to the combination of improving economic data in the US and the relative stability in the eurozone, which continues to work through its debt crisis.

Nomura’s George Goncalves has said that Treasuries have hit a fork in the road”: good news keeps coming and rates continue to rise or hope fades and rates fall again.

So, it’s pretty clear that Treasuries is the hot story in the global financial markets right now. And if you’re not convinced of it yet, Bank of America Merrill Lynch has declared the 30-Year Treasury yield as “The Most Important Chart In The World.”

Michael Hartnett, BofA‘s Chief Global Equity Strategist recently wrote about it in a note to clients:

The Most Important Chart in the World
The 30-year Treasury yield has bounced off the 2.5% level, as it did in 2008. If the 30-year Treasury yield has truly marked a secular double-low of 2.5%, as rising US real estate prices show that low rates are finally working, then the world of asset allocation is about to be turned on its head by The Great Rotation.

In other words, low rates may have actually boosted the economy, but a sudden outflow of funds from Treasuries could lead to some volatilty.

Here’s the chart BofA provided in their note:

 

chart 30 year yield

Bank of America Merrill Lynch

 

See Also: The Most Important Charts In The World >

Read more: http://www.businessinsider.com/bofa-most-important-chart-in-the-world-30-year-yield-2012-8#ixzz23y9Dd37G

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