Tags: Treasury | yields | spike | bubble

Economist Apoteker: Treasury Yields Might Spike 100 Basis Points Next Year

Wednesday, 03 Oct 2012 09:00 AM

By Dan Weil

An improved global economic picture could send the 10-year Treasury yield soaring more than a full percentage point next year, says Thierry Apoteker, CEO and chief economist of research group TAC Financial.

“We are getting into bubble territory,” he tells CNBC. “The U.S. 10-year bond yield could move to 2.5 and 3 percent next year, which would be a big risk for bondholders.”

The rate has plummeted to 1.6 percent from 3.74 percent before the financial crisis broke in September 2008. That move has come as investors sought a safe haven, most recently from sagging economies around the world and Europe’s financial crisis.

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

But Apoteker says those problems have begun to ease and notes that the 10-year yield already has rebounded from its July 25 record low of 1.38 percent.

“[I]f there are any improvements in the perception that risk is subsiding, that could lead investors to offload those Treasury assets,” Apoteker says.

“And if that happens quickly, it would be dangerous for the bond market because it would lead to a weaker dollar.”

Apoteker isn’t the only one looking for Treasury prices to plunge. MarketWatch columnist Howard Gold writes that “long Treasury bonds could be the mother of all bond bubbles.”

And hedge fund manager Doug Kass argues on Real Money Pro that “shorting the U.S. fixed-income market is still the trade of the decade.”

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

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