As the world waits for a cooperative agreement within the European Union to save Greece and keep the union together, and as traders and investors anticipate the next move by the U.S. Federal Reserve and central banks around the world, one thing remains true...
U.S. treasury yields can't get much lower.
Sure, they can go lower, and they very well may. But how low, and what is the end game? 0% treasury yields?
It's possible.
Maybe things will get so bad that investors will be willing to pay the U.S. Treasury to hold their money, resulting in negative yields. Yields on some short term treasuries are already negative when we factor in inflation.
I prefer to be a realist and certainly recognize that the economic situation worldwide could still get worse before it gets measurably better. But I also believe it will get better. With that in mind, you have to honestly look at the risk involved in holding U.S. treasuries. Despite the United States monetary and fiscal travails, they are still considered a safe haven. Billions upon billions of dollars are parked in treasuries. But what happens when things do improve? (more)
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