Tomahawk, WI 10/16/2013 (BasicsMedia) – iShares Barclays 20+ Yr Treas.Bond (ETF) (NYSEARCA: TLT) is very good in advising investors on the most vulnerable sectors they need to avoid. No other tool is quiet good at giving investor the information they need on sectors that are risky and should be avoided than TLT. A few years ago, and as recently as 2012, several analysts predicted that long-term bond prices would collapse, and this is what is happening right now. The bond market has nothing to be proud of regarding 2013, which has been referred to as one of the worst in recent years.

Short-Term Bond Prices Rise in 2013

Earlier in 2013, I was one of the few analysts to state categorically that 2013 would see a rise in short term bond prices. If you followed my advice, and you often take a keen interest in short term bond prices, you would know that this is exactly what has happened. The U.S. government is in need of money. It has auctioned one month Treasury Bills and this has directly helped to increase short-term bond prices. The last time the 1-month Treasury Bills had such a high yield, was back in the fall of 2008. The current levels are the highest in the last 5 years.

What happened in 2008 to create high yields for 1-month Treasury Bills? If you can remember, in the fall of 2008, Lehman Brothers was on the verge of going bankrupt. The credit markets were not spared and their impacts were felt across all financial sectors. It is the year when the effects of the global financial crisis were emerging and there was a lot of concern from all stakeholders as to the direction that the global and U.S. economy would take. All these factors conspired to make 2008 the year when the short-term bills yielded the most, until 2013.

Why Short-Term Prices Have Risen in 2013

Fast forward to 2013 and you immediately notice an interesting trend emerging. We are fast approaching the debt-ceiling deadline. Furthermore, the economy is still struggling from the effects of the recent government shutdown, which was the first in the last 17 years. I expected that the market would react in this manner, and this is exactly what has transpired. The bond market bubble was due to slow down at some point. It has started doing just that in 2013 and from what I have observed up to this point, I expect this to continue for an extended period.

The slowing down of the bond prices is expected to continue for quite some time. The effects will be borne by TLT and other major ETFs. This will make it easier for investors to watch TLT and discover the stocks or sectors which they do not expect to do well. Short-term yields will settle down a bit. You will be able to tell when this is happening by paying attention to TLT, as well as all the industries and stocks it covers. If you want to make money, you cannot afford to ignore TLT in the coming months and weeks. It will give you guidelines on how to invest.

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