Make no mistake. America has become the port of choice in this financial storm. There’s even more evidence suggesting that investors are seeking safe haven in government bonds.
History In The Making
Earlier in the week, 10- and 30-year T-bill yields reached five-decade lows as investors sought out the relative safety of bonds after getting spooked by another sharp sell-off.
And on Friday shorter term T-bill yields neared zero. (Remember yields move opposite to prices). It goes to show that in an increasingly uncertain world, investors would rather earn next to nothing than take on risk. (The three-month bill yields a microscopic 0.02 percent).
"It's pretty rational what's occurred," explains Mohamed El-Erian, the chief executive of bond giant Pacific Investment Management Co. or PIMCO. "people are scared and Friday's employment number was pretty scary."
"We're already at (yield) levels we've never seen before. It's just difficult to continue buying Treasuries at these prices," adds Kim Rupert, managing director of global fixed-income analysis at Action Economics in San Francisco.
In fact Kim Rupert’s sentiment is shared by many investors. And that’s left them asking, might bonds might be the biggest bubble of them all?