Grim choice for investors: Accept very low bond yields or face a 50% crash in stocks, strategist says
The 30-year Treasury note TMUBMUSD30Y, -0.89% is yielding around 2.19%, making it the only interest rate left among G-20 developed countries above 2%, he says.
“That is a high yield, that’s what you dream for,” Bianco tells MarketWatch in an interview. “The 30-year bond is up 22% this year, it’s well ahead of the S&P. Especially if you look at negative yields in Europe, this has been one of the best years in history to own fixed-income securities, especially investment grade from a return perspective.”
“I don’t think the world can handle high rates anymore,” Bianco said, recalling how a year ago, the yield on the U.S. 10-year bond TMUBMUSD10Y, -0.39% hit 3.25%, and the S&P 500 fell nearly 20%. When the Fed backed off interest rates and promised to be patient in early January, the market rebounded.
“What we showed was we went to 3.25% for a couple of weeks and the U.S. stock market broke,” he said. “I don’t think there’s any way we can get to 4% or 5%, without this creating a lot of damage.”
marketwatch.com
I think part of reason homebuilders so strong is mortgage rates will be under 4% for a while?? New starter homes for 30 something Millenials HUGE business and the numbers will work for now in most markets of growth..
https://www.marketwatch.com/story/bond-yields-arent-going-any-higher-and-if-they-do-stocks-will-crash-says-james-bianco-2019-10-02
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