Tags: Bond | market | Bubble | pop | Stocks

Advisers: Bond Market Bubble to Pop, Catapult Stocks

Tuesday, 06 Apr 2010 09:53 AM

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
Investors' love affair with bonds appears to be ending, leading many financial advisers to expect a surge in stocks.

"This is the beginning of the end,” says Bob Froelich, senior managing director at The Hartford.

“The bond market is a bubble. It's getting ready to burst," he recently told CNBC.

Since the financial crisis almost three years ago, investors have bought bonds as a hedge against continued economic peril, as the sharply higher level of money flowing into bond funds shows.

Foreign governments, particularly China and Japan, have bought U.S. debt heavily as well, which helped finance stimulus and bailout programs.

Bond buying by foreign countries comes with a cost — the inevitability that supply will eventually outstrip demand, forcing issuers to pay higher yields in order to attract buyers.

Moreover, the Federal Reserve cut its key lending rate over the past three years to near zero, causing bond yields to slip even as the government flooded the economy with debt and deficits.

Even so, international appetite for U.S. Treasuries remained fairly strong up until last week's auctions, when bonds were obviously less well received.

While the debt sales were hardly a disaster by historical standards, they were seen by some as a signal that the government's recipe was no longer working.

The latest S&P Case-Shiller home-price index showed that home prices rose in January, prompting an uptick in the stock market, huliq.com reports.

The news comes at time when the Federal Reserve is making moves to exit from its mortgage bailout tactics including the buying of $1.25 trillion in mortgage-backed securities.

© 2014 Moneynews. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

Report: US Special Forces Attempted to Save Journalist Before Beheading

Wednesday, 20 Aug 2014 19:30 PM

U.S. Special Forces attempted to free James Foley, the American journalist beheaded by ISIS, earlier this summer, but Fo . . .

Christian NY Farm Owners Fined $13K for Refusing Same-Sex Wedding

Wednesday, 20 Aug 2014 19:48 PM

A Christian couple who owns a farm in upstate New York has been fined $10,000 and ordered to pay two women $1,500 each f . . .

Pete Hoekstra to Newsmax: ISIS 'Needs to Be Eliminated'

Wednesday, 20 Aug 2014 19:01 PM

The United States can best respond to the beheading of American journalist James Foley by Islamic State (ISIS) militants . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved