Thursday, February 7, 2013

Jim Rogers Treasury Securities Headed Much Lower

“I’m short long-term government bonds,” betting the securities will fall, Jim Rogers, told Bloomberg Radio, yesterday. “I plan to short more. That bull market, that’s a bubble.”

That's in line with the analysis that EPJ has been putting out in the Daily Alert. Given the size of the current deficit and the fact that the Treasury will have to go into the market to finance Social Security and Medicare payments, the upward pressure on the Treasury market will be enormous. If the Fed steps in to push rates lower short-term, it will only mean added price inflation pressure that will ultimately push interest rates even higher.

The decline in Treasury bonds will be a multi-year event. It may last a decade.


  1. Japan and other surplus nations continue to pile into Treasuries in an effort to depress their currencies. Add to this continual buying by the Fed and more regulation designed to force banks and pension providers to own them (just 10% of US bank assets are held in USTs today, compared with around 40% in the 1950s) and I wouldn't bet on a decline anytime soon. As far as financial repression is concerned, the government isn't out of ammo yet.

  2. ...Perhaps, but you are only looking at one part of the equation. If the public desires to hold less money or fixed income they will sell bonds to buy stocks, land, food, clothes etc. further aggravating price rises in those assets then further reducing the public's desire to hold money balances (or bonds).

    Human Action means that people act in their best interest. Right now or recently buying bonds by the Fed is considered a positive for bulls in the bond market, but the SAME action next month or next year would or could be considered BEARISH for bonds because it is viewed as INFLATIONARY. Predicting the immediate preferences of others is difficult, but history tells us that fiat currency has never been kind to bond holders.

    No one knows the timing but the fuel is there for some pretty good devastation in bond portfolios.