Tags: Wien | US | Treasury | Bonds

Byron Wien: US Treasury Bonds Are Popular Due to Global Fear

Thursday, 09 Feb 2012 09:02 AM

U.S. Treasurys have become a popular investment mainly due to fear gripping markets and economies elsewhere in the world, says Byron Wien, vice chairman of Blackstone Advisory Partners.

Uncertainty has sent investors rushing to Treasurys, especially due to the European debt crisis.

Headlines often describe demand for Treasurys as a safety play, although safety is a "sanitized" word, Wien says.

"The right word is fear. The reason that there is so much money flowing into U.S. Treasurys, the reason that we have a 10-year Treasury yielding 2 percent, is because of fear," Wien tells CNBC.
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"They're not investing, they're parking their money. They're parking their money in Treasurys because they know if they put a dollar in, they'll get a dollar back. It may not buy as much but they'll get a dollar back."

Fear is gripping every corner of the world.

Japan is dealing with continued fallout from the 2011 earthquake and meltdown at the Fukushima Daiichi nuclear power plant.

China is battling uncertainties in its real estate and the banking system, while the fate of the Middle East remains unclear due to the Arab Spring uprisings, which has toppled government after government.

Still, however, the outlook looks OK, Wien says.

"The big issues facing the market are: is the European Union going to survive? My answer is yes. Is the U.S. economy going to grow at a reasonable rate of between 2.5 percent and 3 percent? My answer to that is yes."

Stocks are due to climb as prices still don't reflect healthy earnings, Wien says.

Others agree.

"You can make a good case that stocks are relatively cheap," says Bill Stone of PNC Wealth Management, according to USA Today. "There's room to the upside."

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2012-02-09
Thursday, 09 Feb 2012 09:02 AM
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