CNBC Mad Money host James Cramer says it’s time to sell Treasuries, thanks to the onset of economic recovery and inflation.
“I think the big run in U.S. Treasuries has ended,” he said on his show.
“They’ve moved up enough, and it’s time for you to sell 10-year and 30-year Treasuries.”
Inflation will return, Cramer said.
“Once economic growth starts kicking in, we’re bound to see some inflation. The higher inflation goes, the less attractive the yields on Treasuries become in comparison. . . I believe strongly we have seen the trough in Treasury yields.”
That’s because the economy is rebounding. “We’ve had a steady drumbeat of positive economic news,” Cramer said.
“Inflation plus recovery means sooner or later the Fed is going to have to start raising rates and that pushes Treasuries lower.”
Cramer forecasts that 30-year Treasury yields will soar to 5 percent within the next few months from 4.2 percent currently.
As for the 10-year, “Right here, right now, I’m calling them perhaps the most overvalued securities in the world.”
And what does Cramer recommend as an alternative? “If you want to keep your cash safe, you gotta accept the low rates on CDs now.”
Others see Treasuries staying steady. “There are a few conflicting forces,” Dan Mulholland, a Treasury at RBC Capital Markets, told Bloomberg.
“Once you get past all the fiscal stimulus, the contraction in consumer credit is a major issue. We are range-bound between 3.25 to 3.75 percent.”
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