Front and center this morning, we had the entire day-and-a-half rally in the risk assets completely erased, wiped out, and reversed yesterday… Recall that I told you in the morning that the euro (EUR) had lost about 1/4-cent while I was writing… Well, it held to near 1.37 until about mid morning, and then the trap door was sprung, and the euro went falling through the 1.37, and 1.36 floors!
[Read more...]Treasury Bonds to Cower in Face of US Debt?
February 3, 2010 By Leave a Comment
In yesterdays edition of The Daily Reckoning, our resident short-selling specialist, Dan Amoss, explained why he believes REITs and especially hotel REITs offer a delectable short-selling opportunity.
Dan returns today to punctuate his bearish analysis of the REIT sector with an equally bearish analysis of Treasury bonds. Im a bear on Treasury bonds, Dan says unapologetically. Prices should go down and yields should go up as the creditworthiness of the US government deteriorates.
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Why the Bond Market Could Repeat History
The US economy is still broken, which is the only plausible reason why bonds might not be a “sell.” But then Bernanke keeps trying to fix the economy, which is the best reason why bonds probably are not a “buy.”
According to conventional wisdom, a sluggish economy tends to reduce demand for credit, which, therefore, tends to keep interest rates low… all else being equal. Robust economic conditions, on the other hand, tend to increase demand for credit, which tends to push interest rates higher…all else being equal.
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