T Bonds - Fill Your Boots While You Can (Opinion Piece)

hank

Provocative article from writer John Dizard in The Financial Times (Not intended as investment advice.)

Donald Trump’s administration and re-election campaign like to talk about how an American “blue-collar boom” has been enabled by deregulation. In truth, the rather soggy “boom” is being underwritten by a $1tn annual deficit created by tax cuts and unchecked spending.If the US really was in a powerful and broad based expansion, a 5.5 per cent federal deficit would be driving up interest rates as capital spending crowded against Treasury borrowing. That is not happening. ... There is a boom going on, to be sure. That would be in the demand for Treasury securities that is making it easy to finance the administration’s tax-cut and spending largesse.”

Financial Times 2/3/2020

*FT articles become hard to access after a few hits. Clearing recent items in cache helps.

Mark

I happen to agree with it but I am neither an economic or financial scholar. Soon the plug will be pulled and another administration will have to deal with the mess while taking all the blame for creating a low-no growth morass. Rinse and repeat. In the interim the already rich will have become richer and everyone else, well who cares really.

sma3

It is a real question of why interest rates are not rising despite massive amounts of debt worldwide. Lacy Hunt and Hoisington Management have claimed for years that the expanding government deficit soaks up all investment capital throttling growth, and each incremental bit of the deficit produces less and less improvement.

https://hoisingtonmgt.com/pdf/HIM2019Q4NP.pdf

They run a long duration US treasury fund but there are many cheaper alternatives if you think they have a good probability of being right. ie TLT or TLH or IEF

expatsp

@Mark +1

carew388

Also EDV in the long duration category.