The largest loss in Treasuries in almost a year occurred in January. PIMCO’s Bill Gross has been warning that the rout in the Treasury market is not over.
Now renowned investor Jim Rogers has joined him. Unemployment rose in January but the Labor Department showed job gains toward the end of 2012 were higher than previously reported.
So what’s the problem?
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Investors are now moving their money to equities. Treasuries have been a safe haven but now that investors have seen the equities markets move up significantly, they want in on the action.
Bond investors are down .9% for the year. Gross says US inflation will pick up from 2014 to 2016. This will create an upper drift in long-term yields.
Rogers has been short bonds two or three times in the last few years. Other analysts say bond yields will trend sideways for the next few years but they would not be surprised if yields trend higher.
Analysts say it is not inconceivable that bonds could be in a bubble
and that the demand for debt will fade.