Wolf Richter: “Smart Money” Prepares to Profit from Bond Market Rout


Naked Capitalism has the article Wolf Richter: “Smart Money” Prepares to Profit from Bond Market Rout. The article finishes with the following:

And bondholders carry all the known and unknown risks of those four decades in return for what is still a minuscule amount of yield. That’s why the ultimate smart money is selling them at a record pace to still eager bond-fund managers that will stuff them, and all the associated risks and potential losses, without compunction into retirement nest eggs. Thank you hallelujah central banks for this deal of a “lifetime.”

From this article, I next read the Marketwatch article Why stocks may find it tough to wiggle out of the bond-market mess. THis article starts with the following:

“The latter part of 2014 and the dawn of 2015 will probably represent one of those episodes in financial history when the fixed-income markets were gripped by a confluence of factors that is unlikely to be repeated over the next hundred years,” said Jefferies’s chief equity strategist, Sean Darby.

There’s fodder for your future tales of battles past this morning, as Fed Chairwoman Janet Yellen’s assets-are-bubbly comments continue to rattle global markets, which have already been duly freaked out by plummeting global bonds. She’s hit us at a tough time.

You know my financial advice is worth every penny you pay for it, but these articles just confirm for me why I wouldn’t buy bonds at the current historically high prices for them. At least with stocks there is the possibility that a company can grow into the inflated price of its stock. With a bond, there is not even this chance to justify the current high prices.

In these days of computerized trading, you don’t even get paper to cover your walls when you find the bonds to be worthless to sell.

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