Yes, but you have to buy a ticket first.
Posted on 06/14/2013 10:31:55 AM PDT by blam
JIM O'NEILL: We Could See A Bond Crash
Steven Perlberg
Jun. 14, 2013, 12:33 PM
As the market speculates on when the Fed will begin to slow its quantitative easing program, former Goldman Sachs Asset Management chairman Jim O'Neill isn't alone in believing a taper would mean turbulence for financial markets.
But for O'Neill, it would also "not be a stretch" to see 5% yields on the 10-year Treasury, reports Bloomberg.
Given the 10-year's current 2.11% yield, that would imply a big sell-off in the bond market.
O'Neill talked about that — and his prediction for a bond crash — in his Bloomberg View column earlier this week:
A return to normality eventually implies a benchmark 10-year Treasury yield of 4 percent or more. It won’t happen all at once, but that’s where we’re heading. With yields at roughly 2.2 percent, there’s a long way to go. This transition will mark a recovery of the equity culture and the cooling of investors’ protracted love affair with bonds.
Investors are already pulling money out of bonds and emerging markets like crazy. O'Neill goes on:
High-yield complex municipal bonds and emerging-market bonds are quite likely to suffer a bit more than U.S. Treasuries when the moment comes. The same probably goes for gold (though you might think it has suffered enough in recent months). I wouldn’t mind betting that much-unloved peripheral European bonds will end up being a better thing to own when this happens -- along with various reasonably valued equity markets, of course.
O'Neill believes that once the "love affair" with bonds subsides, investors will fall back in love with equities, even if they too feel a pang from the taper.
(Excerpt) Read more at businessinsider.com ...
How about some sushi with that crash?
I have a bunch of long term bonds yielding anywhere from 5.7 to ~7%, average about 6.5%, and I like them just fine.
Don’t you want to trade in that steady income for some nice new stawwwwks???
This is all manipulated for a fed takeover. Can’t have communism unless it is offered as a solution to a massive financial collapse.
Business Insider is an interesting website, but it’s more like the National Enquirer than Wall Street Journal. A lot of hype.
Peter Schiff maintains, and I believe, that the Fed CANNOT stop the QE, on an interview with the money honey herself, CNBC’s Maria Bartaromo (sp?).
Methinks this talk of ‘tapering back’ is just a head-fake. It’ll stop only when it all comes crashing down.
Perhaps not, but China can buy much shorter durations and diversify its reserve and asset holdings, thereby ending the bond run no matter what the Fed does. Which is exactly what’s happening.
Yes, but you have to buy a ticket first.
Savers and retirees that want to avoid the risk of equities have been suffering with these low rates (including myself) so I hope the rates do go up. Of course it won’t help the “recovering housing market”.
The don't know history. Last time rates went up, gold spiked with the rates. After the markets saw that Volker was serious about fighting inflation, gold crashed. This time Bernanke has kept rates too low for far too long. An interest rate spike of a couple points that they are talking about will only wet the public's appetite for gold. Rates would have to get to 15% this time before anyone thinks that they are actually tightening money.
I read that the gubmint has stopped investing bonds that DoD employees have as part of their retirement plans - could hurt a bunch of us if they don’t “make it right” by putting promised funding (I donate much more than they match) back into it as they have in the past. I know some will decide to slam me for being part of the eeeevillll civilian workers, but some of us do serve a purpose far removed from the ones that are used as examples of why we should all just go away. The Congress giveth and the Congress taketh away - just ask us vets who were promised free medical care for life if we would only donate 20 years or more to the military...
Yup. I like adventure.
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