This Bond Bull Has Some Nerve

摘要

Van R. Hoisington has had a tough summer, as evidence piled up that the U.S. recovery was gaining strength. That's never a good thing for the long-term Treasury bonds he has stuffed into his portfolios. Recently, a Commerce Department report containing more bad news landed on his desk in Austin, Texas: Gross domestic product rose at a 3.1% annual rate in the second quarter, compared with a previous estimate of 2.4%. Hoisington turns to the section on consumer spending, pulls out a calculator and hands down his verdict: "Unsustainable." What he sees in this otherwise optimistic report is consumer spending growing more than twice as fast as wages―and a long-bond rally when that imbalance corrects itself and the economy slows. He may be right, but not this day. The market begins punishing his holdings immediately after the report's release, though they later recover. The 30-year 5.375% Treasury ends up closing the week at 102.20 (or $ 1,022 for a bond with a $1,000 face value), down from 119.60 in June.