Could This Be Start of 'The Great Bear Market in Bonds'? Published: Tuesday, 30 Mar 2010 | 1:10 PM ET Text Size By:
Jeff Cox CNBC.com
"One firm calls it "The End of the Affair." A strategist says it's "the beginning of the end." A trader asks, "Has the great bear market in bonds now started?"
However the situation is framed, one thing is becoming clear: Investors' long courtship with debt appears to be coming to a close, and an extended romance with stocks could have yet another chapter.
Last week's poorly received series of Treasury auctions looks now to be a fixed-income flare, a warning shot that too much debt amid too little fiscal restraint is making the bond market frothy and ready to come to an unsightly crescendo.
And the damage could hit not only Treasurys but also agency-backed bonds as well as corporates with a longer term than two or three years.
"This is the last leg of money coming off the sidelines, the final rotation into the bond market," says Bob Froelich, senior managing director at The Hartford in Simsbury, Conn. "This is the beginning of the end. The bond market is a bubble. It's getting ready to burst."
Since the financial crisis began in 2007, investors have been keen to buy up bonds as protection against the crumbling economy. That tendency has been reflected in part by a sharply higher level of money flowing into bond funds as opposed to equity funds............."
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What i don't understand is that when this credit bubble begins to undwind that would be deflationary not inflationary right??
therefore equities will suffer like what happened to Japan 1989->2009.
This is an extreme case but it has happened before. No reason why it couldnt again, Japan index lost 82.5% during those 20 years and is still well off its peak.
However i just can't see how we can have an improving economy just by taking on more and more debt which no doubt will inevitably lead to default. Do you actully think the U.S. will be able to pay back all its creditors?
this is all going to end badly its not a matter of IF but when IMO.
However i am a trader and haveto keep doing it as i see it. Im confused by all these fundamentals lol..
I do agree that dips should be bought but imo every correction and rally its getting more and more dangerous to keep buying the dips.
(20min delay)