Former Bank of England policymaker William Buiter says that investors should shun Treasuries because it is almost certain the US will have to raise rates next year. In an interview with Bloomberg Radio, he said:
"Rates will have to start rising, probably later in 2010, as inflation expectations medium and long term show up in higher long rates." He contined to say:
"Globally, interest rates are only going to go one way, and that is up. In the medium term, on a horizon of three to five years, there’s no doubt that the massive deficits and the temptation of government and central banks to finance these deficits with their money creation is going to put upward pressure on inflation."
Ten year Treasury Note yields are expected to rise to 3.82% next year from 3.47% today. Any rise in yields for new bonds pushes down the value of existing bonds, as investors are willing to pay less for bonds that pay a low interest rate.
Sponsor Updates and Offers
|
|
|
Related Articles:
Summer Vacation for the Fed by PhilR - Jun 23, 2007
California Asks for TARP Money to Support Municipal Bonds by soczie - May 26, 2009
Yield Curve Steepening as Short Term Rates Drop by Sam Cass - Nov 15, 2007
Treasuries Gain As New Home Sales Fall to 12 Year Low by Sam Cass - Dec 28, 2007
Is the bear market in stocks behind us? by ktexas - May 07, 2008.
Add to reading list
