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Buffett And Gross Agree: Slump In 30-Year Bonds Makes Good Sense

TedTed
in Fund Discussions
FYI: Warren Buffett and Bill Gross signaled the end is at hand for Treasury market bulls as 30-year bond yields rose to a four-month high.
Longer-maturity Treasuries led losses after Buffett, the billionaire chairman of Berkshire Hathaway Inc., said long-term bonds are overvalued. Touting bearish bets after yields climbed last week by the most in almost two months, Gross said the bull market “supercycle” for both bonds and stocks is ending.
Regards,
Ted
http://www.bloomberg.com/news/articles/2015-05-04/buffett-and-gross-agree-slump-in-30-year-bonds-makes-good-sense

Comments

  • beebee
    edited May 2015
    Reading between the lines, I see housing values taking a hit along this raising interest rate curve.

    In a raising interest rate environment these 30 yr bonds (home loans) will put downward pressure on the value of homes just like they put downward pressure on the face value of a bond. Selling into this curve will cause you to take a hit on the bond value (home price).

    So much for "home equity".

    Owner financing may return as sellers choose to be the bank to the new borrower giving the buyer a sweeter deal while the seller gets a principal and interest payment to use as income and help offset capital loss on the bond.

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