Overall, long-term bonds may still perform well(by Hussman)

In bonds, Treasury yields have declined further, as have the yields oninflation protected securities. Precious metals shares have alsoperformed quite well, all of which brought the Strategic Total Returnto a fresh high last week. In bonds, it is important to recognize thatwhile credit concerns and widening risk spreads tend to be quite goodfor the Treasury market (as investors seek safe havens), it is alsoimportant to recognize that, say, 10-year Treasuries are priced todeliver long-term returns of, well, their yield to maturity of about4.38%. At that level of yields, with a relatively flat yield curve andstill moderate inflation, speculation at the long end of the maturityspectrum can be quite dangerous, and gains can be abruptly reversed.Yes, recessions tend to be good for long-term bonds, but bond yieldstypically start at much higher levels at the beginning of weak economicperiods. Recessions tend to produce a steepening in the yield curve, soit's not at all clear that even lower short-term yields will producemuch “give” at the long-end. Overall, long-term bonds may still performwell in a credit implosion, but with a good bit of volatility. Ibelieve that it is more appropriate to nibble on longer durationsduring periodic selloffs (yield surges) rather than chasing low yieldswhen bonds are already quite overbought.