In my 2009 Investment Predictions I said:

Treasuries underperform TIPS (treasury inflation protected securities), as inflation fears cause a sell-off in bonds and a rush into TIPS.

This has been a phenomenal bond trade.   Treasuries have declined 23% in less than 6 months while TIPS have gained 2%.   While the long-term fundamentals of this trade appear well intact I believe the market may have gotten a bit ahead of itself in the near-term. I’ve attached a one year chart of the TLT index fund which shows the incredibly rapid decline of the long bond.  As you can see we’re nearing downward momentum levels that simply become unsustainable in the near-term.  If you’re still short treasuries I think we’re beginning to see very unfavorable risk/reward levels on the downside.  We could very well be on the verge of the implosion of the bond bubble, but prudence does not justify pressing on the gas here.