How to Manage Bond Fund Risk

[Chuckanut]

According to one analyst, US Government bonds are still the shelter of choice worldwide. Foreign money is poring into US bonds keeping interest rates low despite factors that might raise them. He offered no data to support this during the 17 second clip on radio.

 

[audreyh1]

Also, Europe rates are expected to be lowered due to their weak economy and very low inflation, so this attracts buyers to the US treasuries, as well as strengthening th dollar.

 

[audreyh1]

yep , the bond market marches to its own drum. when it is good ready and sees things in a different light that is when longer rates will rise , not just because the fed hikes the fed funds rate .

actually there was an article in forbes that i kind of disagreed with

How Not To Get Soaked When The Bond Bubble Bursts - Forbes

Yeah - that seems to use the simple formula of interest rates staying the same across all durations even though history shows it rarely happens that way.

Another market perspective on the timing of rate rises:
UPDATE: Market-Based Rate Predictions

 

[Dash man]

The Fed has been fighting deflation with the low interest rates and money printing, and are hoping for inflation to make it easier to handle the huge debt. They just hope inflation doesn't get out of control. They need to keep interest rates lower than the inflation rate to keep the debt from exploding more than it already is. The worst case is deflation followed by hyperinflation where bond interest rates will remain low only to be devoured in value by hyperinflation and the high interest rates that will be required to fight it. We live in interesting times.

 

[audreyh1]

BTW, the 10 year just dropped below 2.5%. In fact it's below 2.45%, lowest since last June, almost a year ago!