This Should Make You Wonder
I think his person has it right when he writes: “You Won’t BELIEVE How Bearish Investors Are On Treasuries”.
Barron’s conducted a poll of portfolio managers asking them about their outlook on the markets and economy. As we can see from the table below, only 2% are bullish on Treasuries and 81% are bearish.
Table 1. Barron’s Poll of Portfolio Managers
The author sums this tidbit of information very nicely when he asks: “can you imagine any other asset that was in the midst of a 30-year bull market, that had just 2% of the investing population saying they were bullish? Frankly, it’s unfathomable. People have long said Treasuries were in a bubble, but it’s hard to believe any bubble has burst with just 2% being long.”
Category: Bonds
Dr. Lerner,
This is baffling. Is there another historical example of an asset class with this type of ratio? I can’t think of one. I wonder what Japanese bond investor sentiment was when their 10 Yr breached 2% to the downside. It has been the “widower” trade to be short Japanese bonds for a long time. I don’t see why our 10 Yr can’t eventually breach 1% like Japan has recently.
Erik
It might take a few years. I think the 30 year JGB has traded near or below 1.7%. Japan has had a mild sustained deflation that hasn’t shown up yet in US data, but not to say that it won’t. It took several years post crisis for deflation to show up in Japan in spite of huge fiscal stimulus packages that were expected to bring on inflation.
Lacy Hunt and Van Hoisington write a pretty good quarterly report. Japan demonstrated that a bond bull can go well beyond where anyone would reasonably expect, and real estate / equity prices can go well below.