THE PERILS OF T-BONDS: Owning Treasuries at today's yield levels is dangerous to your wealth

摘要

BOND WIZARDS, AMONG them Pimco luminary Bill Gross, keep warning that prices of long-term Treasury bonds may crash should yields rise sharply. Yet those yields appear to be in a safety zone, stubbornly remaining near 4% despite an inflation rate of about 5% and massive government deficits. Buy long-term Treasury debt today and you're guaranteeing a loss of purchasing power, even before taxes. Worse, you're vulnerable to a significant loss of principal if yields rise to a more rational level and you have to sell your bonds before they mature. Bond-fund shares would also plunge.