Big Bond Institutions Are Getting Nervous
Big Bond Institutions Are Getting Nervous by Justin Spittler – Casey Research
We’ve talked about the global bond rout a lot in recent weeks. We told you that German 10-year bonds have fallen harder than at any time since 1998… and 10-year US Treasuries are now down for the year.
Bonds have been in a bull market for 35 years. So this current selloff could very well be just a blip on the radar.
But some important bond investors seem to think it’s something more. Pimco, one of the biggest bond fund managers, has cut almost two-thirds of its US government debt holdings.
It’s worried that the Fed will surprise markets by hiking rates in September… which would hurt the value of US bonds.
Economic data is adding to bondholders’ anxiety. The latest labor survey shows significant improvement. US employers are having trouble filling jobs and holding on to workers.
That’s good news for most Americans. But the better the economy is doing, the more likely the Fed is to raise rates. So it’s bad news for bondholders.
Now’s the Time to Buy Things the Government Can’t Steal from You
Central bankers know they can fool people with inflation. As long as wages are steady or rising, hardly anyone will notice that prices are rising faster. It’s how central banks have been silently stealing from us for decades.
To protect themselves, wealthy investors are buying hard assets that will retain value when inflation kicks in. They’re buying things like railroads and energy stocks.
We recommend that you do the same. And now’s the time to buy these assets that the government can’t silently steal, while they’re still relatively cheap. If you wait until the inflation is obvious, it might be too late… hard assets prices will already have gone to the moon.