The last U.S. Treasury bond, with a coupon above 10 percent, matures tomorrow.
According to Bloomberg, the bond was issued on Aug. 15, 1985, and is one of just five Treasury bonds left with coupons of 9 percent or higher. All of them mature in the next three years.
The most recent 30-year Treasury bond sold by the U.S. government has a coupon of only 2.875 percent.
I believe rates on Treasury bonds have already bottomed and that we are at the start of a multi-year climb in rates.
Treasury bill rates bottomed at the start of 2012.
There are a multitude of factors, including accelerating price inflation, the necessity for massive new borrowing by the Treasury, less demand for Treasury bonds from overseas, disappearing bond buying form Social Security, that will drive rate higher.
There is absolutely no reason to hold long term U.S. dollar denominated at this time.
-RW
"There is absolutely no reason to hold long term U.S. dollar denominated at this time.'
ReplyDeleteIf in the upcoming weeks, US equities get hammered liked commodities have the last few years, US gov bonds and the US dollar will soar no matter how badly flawed they are conceptually.