Core Viewpoint - The recent surge in U.S. Treasury yields above 5% presents a compelling buying opportunity, despite being one of the least favored trades in the current market sentiment [1] Group 1: Market Conditions - The rolling return of the U.S. 10-year Treasury bond has fallen into negative territory, reflecting a level of market neglect comparable to that seen in 2009 for U.S. stocks and in 2018 for commodities [2] - The yield spread between 30-year U.S. Treasuries and Microsoft bonds has narrowed to a historical low of just 20 basis points, indicating that the market perceives lower credit risk in Microsoft compared to the U.S. government [4] Group 2: Economic Indicators - U.S. fiscal deficit is alarming; if spending $100 per second, it would take 2,248 years to exhaust the $7.1 trillion spent by the government last year [6] - Inflation has accumulated by 25% over the past five years, with a basket of goods that cost $100 in 2020 now priced at $125 in the U.S. and Europe, and $127 in the UK [13] - The U.S. federal budget deficit has averaged 9% of GDP over the past five years, with Moody's projecting this level to persist until 2034 [15] Group 3: Investment Strategies - The "Anything But Bonds" (ABB) strategy has gained traction on Wall Street, reflecting a significant shift in investor sentiment away from bonds [9] - Hartnett advocates for a contrarian approach: "buy the humiliated assets, sell the arrogant assets," suggesting that the key catalysts for the bond bear market have largely been priced in by 2025 [19] - The "BIG strategy" (Bonds, International stocks, Gold) has performed well this year, with government bonds up 4%, international stocks up 13%, and gold up 25%, while 30-year U.S. Treasuries have recorded a -2.5% return [19] Group 4: Future Outlook - A critical threshold for the 5-year U.S. Treasury yield is 3.25%; exceeding this level could accelerate annual interest expenses, while staying below it may help maintain fiscal stability [20] - Hartnett views the current yield above 5% on 30-year U.S. Treasuries as a potential entry point for long-term investments, warning that a loss of confidence in long-term bonds and the dollar could have devastating effects on the stock market [20]