REUTERS: The bond market is in a"bubble," particularly sovereign debt, Guggenheim Partners global chief investment officer Scott Minerd warned on Thursday, and he said that efforts by the Federal Reserve to head off a recession by cutting interest rates will ultimately prove futile.
"Where is the bubble today?" Minerd wrote in a letter to clients."I hate to admit the ugly truth, but it may well be in bonds, and in particular the sovereign debt of governments around the world. The category of supposed 'risk-free' assets has risen to prices which guarantee a loss to investors in many countries around the world." He named Europe and Japan, as examples.
Minerd said he doubts the end is near."The curse of negative rates will be with us for a while, and eventually may reach the shores of the United States," he said.The yield on the 30-year Treasury bond dropped to a record low last week, breaching the 2per cent level for the first time. The yield on the long bond is currently trading around 2.10per cent.
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