Wednesday, March 31, 2010
When Bond Market Giants Speak, Should You Listen?
Bill Gross, Jack Bogle and David Kelly
Dan Fuss
Is the "new norm" for the foreseeable future a 4% average return for bonds, and 6-8% for stocks? No one can predict the future, but some of the better minds in investing seems to think so. Do we need to readjust our expectations? Have we been spoiled by the 30 year bull run in bonds? When treasury rates are this low, it is just a matter of time before they start rising.
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They will rise. The question is when. Today the banking system is flush with reserves and the banks are buying Treasuries rather than lending thereby driving bond prices through the rool and keeping yields low.
ReplyDeleteOf course today is the day that the Fed has declared it will stop buying mortgage-backeds so that's another factor pushing rates higher.