American bonds have been the hot topic of the news lately: are you bearish or bullish? Is there really a bubble? When will buying stop? I will set out both sides of the argument and then you as the reader can decide.
Bearish:
-US Treasuries have continued to yield less and less, with inflation-adjusted bonds for the next four years even having a negative yield
-Bond funds for the past three years have had massive inflows, while equity funds have been experiencing an exodus, making a bubble resembling the tech disaster 10 years ago
-Capital losses on bonds are looming as every rate increase by the government will devalue bonds and rates can go nowhere but up at this point
Bullish:
-Many people believe that the US will never default making this situation quite different from the tech crash, as capital is nearly guarenteed
-There are also other investors who believe that aging demographics increase the number of risk averse assets demands, therefore bond buying will continue as the baby boomers age
-With the economy at its current pace there is a good chance that rates will not be increasing anytime soon.
Both sides present good points, so now its up to you to decide.
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