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September’s Twin Stock, Bond Selloff Is Bitter Pill For Fed-Weary Markets
All eyes were once again on the rates complex Thursday, as traders and investors of all shapes and sizes obsessed over a bond rout that generally refuses to abate.
The locus of the pain was gilts, which repriced sharply in an eyebrow-raising selloff+. Treasurys were comparatively calm, for a change.
When taken with the simultaneous correction in equities this month and last, the inability of duration to sustain a bid (or really even catch one at all) is prompting "breathless" speculation about
I am nearly sixty now, and I am rather conservative with my investments. I took my lumps with bonds earlier this year in exchange for a tax write-off, and because I believed things were only going to get worse, at least until the Fed stopped hiking. I moved that money into 8-week T-Bills which are now paying around 5.3%. I missed the AI rally, and felt foolish for not taking more risk, but I think holding those mid to long-term bonds until now would have been even more painful. I don’t see how stocks can truly rally until real yields level-off or reverse some, and the Fed does not seem to be headed in that direction until at least 2024. True, I guess I risk missing any year-end rally as well.
I continue to believe that US (and therefore global) rates can not stay this high over the next several years – without creating a “hot mess” throughout the world. Plus, there is ample historical evidence of the Fed caving so as not to throw the world into chaos.
Furthermore. anyone living under a corrupt dictatorship (the vast majority of the world) would do almost anything to get their wealth into USD denominated investments. See China.
H-Man, when you can cruise with 5% (short term bills) with no risk, why stick your neck out on the chopping block to make 8% to 15%? A great time to go to the sidelines and watch the game.
So far your idea seems to be a winner.