2013 bond market
From the Editor: Subscribers who followed Keith's most recent play on U.S. Treasuries locked in a 100% gain on Friday. But "this game is a long way from over," he says. So here's what he's recommending now. Take notes. "Home run potential" isn't a phrase Keith uses lightly...
Halfway through Wednesday's session, stocks are in danger of closing in the red for a fifth straight day. And this is all you'll hear about today.
Yet bonds are telling you the real story.
In fact, at this point, they are the next best thing to the Holy Grail if you've got the right perspective and understand what's happening.
This is a big moment.
It's big for uber-investors like Bill Gross, who just experienced something brand-new for PIMCO.
And it's big for you.
So at the very least, strongly consider the first move I'm going to show you today. You don't have to buy a single bond to take advantage of its home run potential. The other two moves I'm going to share with you simply "ice the cake."
But let's go back to the 1980s for a minute, when all this payoff potential began to build...
2013 Bond Market Forecast: Is the Bond Bubble Finally About to Burst?
The Federal Reserve's multi-year prescription of targeting super-low interest rates on federal funds, along with various quantitative easing programs, has pushed yields down on all fixed-income instruments to the benefit of issuers and the detriment of investors.
There is little doubt that the Fed's articulated and executed policies have resulted in a bond-bubble with both short and long-term consequences for investors and the economy.
At some point the bond-bubble will burst. But there is no certainty on when that will happen or what ultimately will cause rates to rise.
What investors need to understand is that while yields and bond prices in 2013 could remain flat relative to closing third quarter 2012 measures, yields are unlikely to fall further and prices are unlikely to rally in 2013, with the possible exception of short-term U.S. treasuries.
However, there is the possibility of what I'm calling a "skyfall."
For fixed-income investors this means there is a chance the bond bubble may finally burst.
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