I guess you can play carry trade with others then. I don't
really know how this will happen, but the treasuries, BLS
aside, already have negative real yield. I think you are
right, and there may be a flight from junk bonds to safety,
but foreigners, who control 4.2 Trillion $ mostly in
treasuries, could notice negative real yields earlier than
others, and dump. It's a question of who is stronger
- an elephant (foreign selling), or a whale (domestic
distress and carry trade buying). I agree that buying could
occur first, but I don't want to bet on that -g-
Trades against USD, such as commodities, precious metals,
foreign currencies and bonds, etc. are better investments at
this time. One could also short bonds, if you believe
in the credit bubble collapse, but I think that's too
risky at this point, since your arguments are valid. |
