US Treasuries are the New 'Japanese Widow Maker'
The treasury market has been back and forth all year long so far. First, we saw that huge rally that recently ended but it gave investors the belief that domestic policies were solid and Europe was stable. As the months rolled by, we began to notice that domestically, conditions are soft here in the US and Europe is now on the brink and fighting for survival. Pimco’s Bill Gross has been a Treasury bear for quite some time now and while it burned him in the second half of 2011, he thinks its a good idea again!
US Treasuries were typically considered a “safe haven” until the Fed’s QE programs, US debt rating cut and debt level rises. These three events alone have done a considerable amount of damage to the integrity of the US Treasury bond. US government bonds were supposed to be your back up, your safety net if the market turned sour. Now yields are diving and it is no place for investors to be. What seemed like such an obvious short, turned out to be a great long.
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