Bullish Case of U.S. Long-term Tresuries

With over 16 trillion bonds  negative yielding bonds, it's hard to ignore 2.02 % ( as of 8/23/2019 , 4:57 pm)  yielding 30-year old treasuries. And U.S. is in late-stage of business cycle (with some parts of world like Germany, already in contraction). It's difficult to imagine what will happen if the economy go in recession. FED won't have no option but to go negative. Or they can use QE (quantitative easing). Both of the scenario are good for bond holders. why bonds ?  Well :

A) Global Investment
1) Over 16 trillion Negative government debt, 2.02% looks pretty decent.
2) Stronger dollar

So this will (already is attracting) attract global investment towards.

Source : WSJ
  

   30 year was 2.95% on Jan 2 2019, now it's 2.02 %.

B) Geo-political issues - Trade war, Brexit, etc
This will further encourage investors to buy safe heaven. Long term treasuries are always a better safe heaven than Gold(doesn't have any dividend) , utilities or Japanese Yen. After today's Trade escalation, seems like the worst scenario is possible - no trade deal and reshaping of the global supply chain and lot of investor pain in the near - mid term. 

C) Inversion of 2/10 yield or FED funds rate to 10 year or the 0 to 6 quarter  - near term yield spread
This already happened not long ago and with 10 year at 1.538 % and 2 year(tracks 12 month forward future for federal funds rates) at 1.527, inversion will follow. This will further encourage  investors to pile in long term Treasuries.

D) Credit Bubble :
 Low interest rates for a long time will result in a credit bubble. when it pops, this is ripple through the credit market and credit spread (high yield ones) will rise and investors will have no place to hide, other than Cash & Treasuries. 

E) Quantitative Easing (QE)
With rates so low , FED has no option but to go with a massive QE, which will further push the yield down and increase their prices.

F) FED Easing  or Policy error
Fed is already in a easing cycle and is done with rate hikes. This is primary because of the slowing global economy and trade issues.

G) Slowing Global Economy

All the above these can trigger a recession and in a recession, Long term Treasuries can prosper (with Gold - which has a 27% + capital gain tax). Also now negative yield is not off the table.

Risks for Treasury :

1)  Expansive Valuation - With Trade resolution or improved market sentiment, can move up the yields, and since so many investors are already piled in Treasuries, it would go up quickly. But this seems difficult now with the escalated tension.

2) Treasury is issuing a record amount of debt because of the last year tax cut, this will bring the yields up. Although this can go on FED balance sheet in case of a QE.

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