Here's Why the Fed Won't Raise Rates

Last Friday, we learned that the U.S. added 295,000 jobs in February versus an estimate of 240,000. In response, the equity market fell precipitously, dragging Treasury bonds down with it. The 25+ year Zero Coupon Treasury Index (NYSEARCA:ZROZ) fell more than 3.4% in a day. Both stocks and bonds fell because of the market's overzealous belief that the Fed will raise rates imminently. The fact of the matter remains that the market is getting a little too excited in anticipating the Fed will raise interest rates. Given my belief, I bought more 30+ year Zero Coupon U.S. Treasury bonds and swaps as I expect the Fed to remain on hold for longer than most expect. The current spread between the 10-Year U.S. Treasury and the 10-Year German Bund is the widest in 25 years, making the U.S. Treasury market a great buy at current levels.