bonds

Bond yields for U.S Treasuries have been rising at one of the fastest paced rates in U.S. history.  This has caused concern on Wall Street and has become a major focus.  Bond King, Jeffrey Gundlach, has said that the yield will rise and as the 10-year Treasury yield approaches 3%, it will cause market turmoil. He has encouraged investors early last year to also invest in Gold. Recently with the U.S. stock market correction, many investors have lost tens of thousands of dollars. A total of over $3 Trillion was lost in market volatility. Many analysts are telling investors not to sell because the economy is on firm footing and this is a normal correction.  The U.S. stock market only had a taste of the potential downturn caused from higher bond yields which was due to the Fed unwinding their balance sheet at the start of this year.  The biggest test yet to come according to Morgan Stanley, uses the analogy of a meal in that this is an, “Appetizer, not the main course,” which is how the bank strategists recently described the sell-off.   Goldman Sachs economist Daan Struyven reported that if there was a surge of the 10-year Treasury yield to 4.5% by year-end, it would cause another 20% to 25% decline in equity prices.  Brian Levine, co-head of global equity trading at Goldman Sachs, recently sent out an email to the investment banks larger clients which stated a stunning prediction, “The Buy the Dip Regime is now over.  The ‘buy the dip’ mentality needs to be thoroughly punished before we find the bottom.” [Read more…] about Feb Newsletter: The Fed is Selling, The Government is Spending, & The Treasury is Creating, but are These Three Bubbles Bursting?