Is the bond market in a bubble?
Investing guru Jim Rogers joins Bill Gross and other bond pessimists, saying he believes a rout in Treasurys probably isn't yet over.
U.S. government debt may continue to be a poor performer, according to investor Jim Rogers, who co-founded the Quantum Fund with George Soros.
Rogers told Bloomberg Radio he's betting against long-term government bonds and believes the bond market is in a bubble.
The stance has Rogers joining several top investors, including Pimco managing director Bill Gross, who have voiced concerns about the bond market and overall debt levels in the United States. Goldman Sachs (GS) and Wells Capital Management have also expressed worry.
"I’m short long-term government bonds,” Rogers said, referring to a short position, or a bet that an asset will lose value. "I plan to short more. That bull market, that’s a bubble."
More investors are growing concerned that the Federal Reserve will slow down its debt purchases if the economy improves. The Labor Department's revisions showed that job gains at the end of 2012 were better than previously reported.
Nevertheless, the Fed last month said it will keep buying securities at the rate of $85 billion a month, citing weather-related disruptions that hurt the economy.
Bill Gross, who runs the world's biggest bond fund, earlier this month said on Bloomberg Radio that inflation could rise from 2014 to 2016, creating "an upper drift in long-term yields."
Gross is also sounding the alarm about borrowing -- on every level. In an investment post he published earlier this month, Gross wrote that he's concerned the modern banking system will lead to inflation and real threats to our economy.
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YES, America is still the best, biggest country to invest in. And YES, the "little guy" is still buying bonds as well. But as long as the Fed continues to be the primary buyer, essentially the government buying it's own debt, continuing to add massive debt to an already impossible to pay back mountain of IOU's, why would you not look to American bonds as the safest investment in all the land?
Until the government finally stops this policy, rates will stay low and continue to be considered the safest bet. Just beware that you'll know the right time to "fold 'em" before you get burnt. GOOD LUCK WITH THAT!!!
We`ve been hearing that bond bubble talk for 5 years.The little guy has been pumping
money into bonds and not stocks and the brokers hate that.How are they going to
put millions in the Caymen islands?
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[BRIEFING.COM] The S&P 500 has slipped about two points off its high for the day (a record high we might add) and everyone is stirring to figure out what the heck happened, especially because it dropped a quick two points right after the top of the hour.
There might be a news catalyst out there. Some have speculated that it may be tied to the results of the 10-yr TIPS auction, but since the Treasury market didn't move in response to the auction, that speculation seems a little ... More
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