Bonds News

Barron's calls Treasury bonds today's biggest bubble

NEW YORK, Jan 4 (Reuters) - U.S. Treasury bonds may represent the biggest investment bubble that exists at the moment, according to this week’s cover story in Barron’s, which argues they offer little safety if the economy strengthens, the dollars weakens, or inflation picks up.

Barron’s, in its Jan. 5 edition, writes that the “chief risk to the Treasury market stems from the potentially inflationary impact of both the Federal Reserve’s super-accommodative monetary policy, which has dropped short rates close to zero, and the enormous looming fiscal stimulus from the federal government.”

The article suggests that the “bear market may have begun Wednesday, when prices of 30-year Treasuries fell 3 percent.”

Barron’s also writes that better value now exists in other segments of the bond market, “including municipals, corporate bonds, convertible securities, some mortgage securities and preferred stock.”

Jim Paulsen, chief investment strategist at Wells Capital Management, says: The only part of the bond market that you need to be bearish on is Treasuries. The other sectors are attractively priced.” (Reporting by Paul Thomasch; Editing by Steve Orlofsky)