“If I were clairvoyant and knew we were going to have a sell-off of this magnitude, I would’ve been all in cash ….”
I have predicted this scenario many, many months ago and I have posted as much important information as I could find on the bond bubble. You do not have to be clairvoyant to know this.
– Formerly safe bonds are increasingly a risky investment (Chicago Tribune):
“The seemingly safest of bonds look like they’ve been transformed from security blankets into bombs.”
NEW YORK (Reuters) – Investors have been blindsided by one financial catastrophe after another over the last 18 months, but throughout the tumult, the government bond market has been their friend.
A brutal drop in long-dated Treasury prices has caught even the best money managers off guard — in some cases wiping out as much as 60 percent of the gains they booked in last year’s huge rally in U.S. Treasuries.
The Vanguard Group, Fidelity Investments, T. Rowe Price and Hoisington Investment Management have seen their government funds down anywhere between 10 percent and 30 percent, as record amounts of debt flood the market to pay for the swelling budget deficit.
What’s stunning about the portfolio declines is the swift plunge in Treasury prices within a short period of time despite the Federal Reserve’s buyback purchases intended to hold down interest rates. Benchmark 10-year Treasury yields have surged to levels not seen in more than six months, resulting in meaningful losses for many portfolios.
The 10-year T-note and 30-year Treasury bond are down 8.58 percent and 24 percent, respectively, in terms of price for the year to date.
“If I were clairvoyant and knew we were going to have a sell-off of this magnitude, I would’ve been all in cash, but I’m not,” said Van Hoisington, whose flagship Wasatch-Hoisington U.S. Treasury Fund is down more than 20 percent.
Read moreUS Treasury bloodbath soaks top fund managers