Thursday, June 16, 2016

Unloved Treasuries
"Many have also begun to warn about Treasury market dangers due to market valuations. These warnings rarely include well-thought out reasons, but are based mainly on the sticker shock of exceptionally low yields. They also include fears of inflations, but maybe CB’s can only produce asset price inflation and hyperinflation (e.g., Venezuela), and not a targeted amount of inflation (i.e., near 2%) .. I concur that the $10 trillion+ of global sovereign and corporate bonds trading at negative yields are an unsustainable paradigm. Yet, the longer foreign central banks are able to maintain such low yields, the more capital that will likely flow into positive yielding U.S. Treasuries .. I caution disliking Treasuries due to low yields without understanding the driving technical factors. Rather than expecting a steep and quick rise in USTreasury yields the way many are vocally calling for, I believe the opposite is more likely."
- Guy Haselmann

1 comment:

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