Are Long Bonds Safe For Your Clients?

Andrew Allentuck was kind enough to quote me in his Investment Executive piece, Are long bonds safe for your clients?:

The question, therefore, comes down to how long today’s low interest rates will last. Upward pressure is in place, says James Hymas, president of Toronto-based Hymas Investment Management Inc. and an expert in preferred shares. “Current interest rates are unsustainable, as is the U.S. deficit,” he says. “Negative real yields on government bonds in the U.S. and in Canada, and the risks intrinsic in investing in the still growing U.S. deficit by way of holding U.S. T-bonds, imply that investors will demand higher interest rates.”

There is as yet no rush to sell bonds, he suggests, but when the rush does start and yields start to drop, the long end of the yield curve will rise swiftly.

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