CLIENT LOGIN
-
-
CIO INSIGHTS
-
BACK TO CIO INSIGHTS
BACK TO ARTICLES & INSIGHTS HOME
-
-
-
-
Investment Insights are written by Angeles' CIO Michael Rosen
Michael has more than 30 years experience as an institutional portfolio manager, investment strategist, trader and academic.
MORE ON RATES...
Published: 06-26-2015A few days ago (Beginning’s End) I suggested 2015 might turn out to be the worst year for bond investors in the past three decades. Here are some additional pictures (courtesy of Goldman Sachs) to quantify the risks.
First we show the principal loss by the end of this year under various scenarios, with yields rising per current expectations or rising to historical means. The consensus expectation is for a loss greater than the current yield. Should yields revert to any of the historic means, losses would be greater.
Before the tears start flowing, though, consider that US investors are likely to see losses much less than our European friends. Germans, for example, could be looking at another 20% loss of value (see Graph below). This is, of course, because US yields are substantially higher than other developed countries. At 2.47% (today), the 10-year Treasury yields more than comparable bonds in Spain or Italy (each with 10-year yields of 2.1%). French OATS yield just 1.2%, German bunds just 0.8% and JGBs 0.5%. The US offers the highest yields in the OECD.
In addition to principal loss should interest rates rise, investors should also pay attention to the froth bubbling up in the high-yield (nee, “junk”) market. Loans with few, or any, covenants are at record levels, multiples ahead of the pace in 2007.
Our advice for bond investors? Caveat Emptor.
PRINT THIS ARTICLE-
Shock, Part 3 (The End of Pax Americana) 12-13-2016
We are all trying to make sense of the election of Donald J. Trump to the presidency, and a few weeks ago I outlined the ...
READ MORE -
California Dreamin' 04-02-2015
Well, maybe not dreaming, but some thoughts.Below, my graph shows the unemployment rates for California and the US since ...
READ MORE -
LOVE 02-14-2017
It's probably no surprise to you that I see offering world-class investment advice as a valuable service for the ...
READ MORE
-
-
CONNECT WITH USSUBSCRIBE TO ANGELES' INSIGHTS
Get the latest investment information and stay on top of market trends.
-
SANTA MONICA
429 SANTA MONICA BLVD
SUITE 650
SANTA MONICA, CA 90401
310.393.6300
GET DIRECTIONS -
CONTACT US
NEW YORK
375 PARK AVENUE
SUITE 2209
NEW YORK, NY 10152
212.451.9240
GET DIRECTIONS -
CHICAGO
400 N. MICHIGAN AVE
SUITE S1700
CHICAGO, IL 60611
312.212.6843
GET DIRECTIONS
