Before I go any further, I want to clarify something ... when I say Treasury bonds, I'm talking about longer-term notes and bonds not the shorter-term notes and bills.
Okay, with that out of the way, I have been fairly vocal about the risk associated with longer-dated Treasuries. And despite a respectable sell-off, I continue to believe that it does not make sense to buy massive amounts of these investments for your income portfolio right now.
No, I am not worried about the U.S. government losing its AAA rating (though that is a small possibility at some point in the future). Instead, I simply believe that the Fed will end up behind the curve regarding inflation and will ultimately have to jack up rates significantly.
When will it happen? Who knows. But if you think long-term yields aren't going to ever get back to 6% and ultimately to 10% or higher, I think you're failing to understand just how much money is being pumped into our economy right now ... and just how "Fed up" foreign investors are becoming with the massive amounts of debt our government is issuing.
If you want to hold "safe" government-backed bonds, I strongly urge you to consider Treaasury Inflation-Protected Securities (TIPS) or I-bonds instead of plain vanilla Treasuries right now ...
Subscribe to:
Post Comments (Atom)
Posts
No comments:
Post a Comment