Bond play could be risky
By Daniel at 16 July, 2009, 7:16 am
Bonds are a very dangerous place to put one’s money right now. Bond prices are falling as yields rise and anyone who buys them at today’s prices could be in for some huge losses. Risk of default has never been higher in corporate and municipal bonds. Interest rates are certain to rise substantially and again today they did rise significantly on Treasuries. STEER CLEAR OF BONDS.
Any fixed rate medium to long term bond is very, very risky right now. We have had unprecedented printing of money in the last year. This will very likely lead to significant inflation in a while. Also we have a government that is taking on immense amounts of debt. Inflation is a convenient way for a government to partially repudiate its debt. I do not think this fact is lost on the current administration. No one wants to be the person holding the 4% thirty year paper when the CPI hits 8% and the ten year bond crosses 10%.
I worry that the same people who took beatings in stocks and real estate are being set up to take another one in bonds.
A.P
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