Posts Tagged The Bond Market

Last week, the yield on the benchmark 10-year Treasury note briefly crossed the  threshold of 4 percent.  The Treasury just auctioned off $82 billion in new debt. That is nearly twice as much as the government paid in the fall of 2008. This means that those of you whom are sitting on USA bonds, especially municipals and treasuries, will see the prices decline as rates rise. If there is a dramatic run up in rates it would likely be because the pessimists were right that market indegestion of too much bond issuance puts more upward pressure on rates and inflation. Another thing to note is that there has already begun a bull market in emerging market debt. The gap between US treasuries and emerging market debt is closing as is the creditworthiness gap. O, how times have changed.   Cash is paying little everywhere. For the moment, we are watching cash positions, prepared for a dip in our equity portfolios, while playing wait and see with the interest rate environment and bond market.

Six Pack Joe Is In For A Rude Awakening

www.crinvestmentadvisors.com

Wealth Advisory

More years of pitiful returns for fixed income investors…

http://www.bloomberg.com/apps/news?pid=20601087&sid=aPZx5kGyDavA

This blog post is from Buttonwoods with The Economist. It’s more technical but worthy. He cites the confusion about inflation vs deflation and the bond market. This is just one more good reason to keep the fixed income portfolio maturities short….less than 3 years. Unless you are sitting on an investment grade 15% that you bought in 1980 and clipping coupons, keep it short. The spread just isn’t worth the risk right now.

http://www.economist.com/blogs/buttonwood/2009/07/inflation_doesnt_work.cfm