Danger lurks in global markets transfixed by rising bond yields

Bloomberg/Liz McCormick and Anchalee Worrachate/2-6-2021

“Treasury yields have jumped to the highest since the early days of the pandemic as the vaccine rollout and potential for another massive U.S. stimulus package revive animal spirits and the prospect of inflation. But years of near-zero rates and a historic debt overhang have left both stocks and bonds uniquely vulnerable to deep losses if yields climb too far on a growth break-out.”

USAGOLD note:  We continued to be befuddled as to why anyone would buy a U.S. Treasuries at current rates. Does it really matter that the10-year Treasury paid .9% in November and pays 1.17% now? The bond market, according to this article, is worried about inflation with one analyst saying “If you have a typical portfolio whereby 60% of assets is in equities and 40% in bonds, you will be hit on both legs.” That’s why prudent investors diversify in a true sense – with assets that are not simultaneously someone else’s liability.