Treasuries

GDP growth of 5.0% projected for 2004. But, fast growing U.S. budget deficit ($507 billion in 2004?) is a significant problem for bonds.

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What might the Fed view as a neutral position? Assessing historical yardsticks for guidance.

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GDP growth of 5.0% projected for 2004. But, fast growing U.S. budget deficit ($483 billion in 2004?) is a significant problem for bonds.

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Don’t get drawn into the TIPs trap. Lack of attractive bond opportunities and prospects for higher inflation may draw investors to Treasury Inflation Protected Bonds. However, there is still risk of significantly higher interest rates, and the fact the inflation factor is tied to an unreliable CPI.

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The spread between Long Quality Corporates and twenty year Treasury bonds is back down to a normal level, as the Treasury shortage elimination-thesis has fallen apart due to rising budget deficits.

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Fast growing U.S. budget deficit ($374 billion in 2003) is a significant problem for bonds. Project 2004 budget deficit will expand to $535 billion.

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GDP growth of 5.0% projected for 2004. But, fast growing U.S. budget deficit is a significant problem for bonds.

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Economy picking up steam in second half. Early Q3 GDP estimate much better than expected.

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New study by The Leuthold Group suggests below average Long T-bond returns can be expected from today’s below average Long T-bond yield of 5.19%.

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Economy picking up steam in second half. Revised Q2 GDP better than expected.

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GDP growth of +4.0% projected for 2003. But, fast growing U.S. budget deficit is a significant problem for bonds.

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Fixed income hedge in portfolios was reduced by one-half in mid-August following the spike in bond yields. TIPS for fixed income investors?…..You can lose money on Treasury Inflation Protected Securities (TIPS). You are protected against inflation but not sharp rise in interest rates.

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High Yield bonds rated marginally attractive after continued spread narrowing.

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“Risk-free bond returns could become return-free risks.” The Leuthold Group has hedged its fixed income position by shorting U.S. Treasuries. May completely hedge entire fixed income exposure later this month.

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Is the Fed ready to buy Ten Year Treasuries to stimulate the economy? This could certainly lead to another housing/refi boom. But are lower rates really necessary to boost business spending?

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Tax disadvantaged REITs might now compete with tax advantaged high yielding non-REITs. We provide a list from a screen identifying high yielding non-REIT stocks.

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Does consumer confidence offers any insight into future spending patterns? Also, the case for shorting T-Bonds.

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Is the Fed ready to buy Ten Year Treasuries, if necessary to stimulate the economy? This could certainly lead to another housing/refi boom, but will it be the catalyst to boost business spending/borrowing? We think not.

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It will be tough for bonds to keep up with stocks over the next several years even though stock and bond returns are neck and neck over the past twenty years.

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Given various assumed compound rates of return, how long will it take for the investor who remained in stocks to catch the investor who shifted to T-bills at the top?

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