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YAMADA SAYS HIGHER RATES ARE COMING

27 February 2010 by Cullen Roche 4 Comments

Louise Yamada, managing director of Louise Yamada Technical Research Advisors, discusses the likelihood of a bear market in bonds and higher interest rates.  This is in agreement with Richard Russell’s outlook:

Source: Bloomberg

Cullen Roche

Cullen Roche

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Comments
  • nicasurfer

    This isn’t totally in agreement with Richard Russell. He is firmly in the deflation camp. He doen’t reccommend holding bonds but preffers them over equities. Bonds will go lower in yield for 2010

    TLT will be th best performing fund in 2010

    02/27/2010 at 3:12 PM
    • Cullen Roche TPC

      Thanks for clarifying. It should read, Yamada agrees with Russell’s outlook for interest rates.

      02/27/2010 at 4:05 PM
  • Mike W

    The financial media is full of talking heads who are best ignored, but this is one smart lady well worth listening to. She was very prescient in calling the breakdown of the S&P a while back.

    I am probably less financially astute than many of this blog’s readers, but it seems to me that anyone interested in fixed income investing at this point would be well served to keep their maturities short. The longer maturities offer very little extra return and an unknown amount of risk.

    These are perilous times for investors indeed.

    02/27/2010 at 5:29 PM
  • svg

    Hardly an original or thought-provoking position. And her reasoning (at least as expressed in this interview) is far too basic. The “experts” are divided into two camps. There are those whoa re shorting the long end of the curve (as the obvious contrarian play to multi-decade low interest rates) and those who think that we will be muddling through and have relatively low/stabe rates for quite some time. At some point, those shorts of long-term bonds will be right. That is certain. The question is “when”? Yamada uses the typical hedging words “transition”, so as not to be proven wrong and be able to look back years from now and say she was right. Well DUH! Of course we are going to transition. But WHEN? If we double-dip (or worse), which I think is highly likely, we are going to continue to muddle through for quite some time and trade within a narrow range in most markets.

    I think a good strategy for those wanting to have bonds in their portfolio is to NOT to buy bond funds or ETFs. You will take major capital losses when rates finally do start rising. Buy bonds directly, hold them until maturity, then re-invest at then current rates. Ladder maturities. Do not buy long bonds. And consider adding real return bonds into your mix.

    02/28/2010 at 10:27 AM