"In a blog post entitled â??Do US bonds resemble dot com stocks?â?? The author of â??Bailout Nationâ??, and CEO of quant research firm Fusion IQ, notes how the current environment for US Treasuries reminds him of the dot com stocks circa 1997-98 in three ways:
'1) You knew momentum was taking them higher;
2) You knew it was going to end badly;
3) If you were honest, you admitted you had precisely zero idea when the day of reckoning would be.â??
Commenting on the post, Ritholtz told Citywire â??the US bond market is now in the final innings of a 30 year bull market. In 1981, ten year US Treasuries hit a high of 15.32%, now theyâ??re at 2.6%â?? (as at 16/08/2010) and there is almost no room left for rates to go lower.â??
He also expressed fears over the continued attraction of US government bonds for foreign investors. â??If you look at Japan, most of the investors in Japanese government bonds are domestic. In the US, the bulk of treasury holders are foreign,’ he said. 'You have to convince them that itâ??s worth holding these bonds with a return of 2% or lower. Itâ??s a tough sell.â??
The Great Collapse is on the way.