Bond investors have a very rocky road in store for them over the next few years, according to one prominent fund manager.
Paul Tudor Jones, who runs the Tudor Investment Corporation, issued a stern warning for the bond market in a recent interview with Goldman Sachs sent to the bank’s clients in a note Wednesday. CNBC has more details:
We have the strongest economy in 40 years, at full employment. The mood is euphoric. But it is unsustainable and comes with costs such as bubbles in stocks and credit.
With rates so low, you can’t trust asset prices today. And if you can’t tell by now, I would steer very clear of bonds. … Bonds are the most expensive they’ve ever been by virtually any metric. They’re overvalued and over-owned.
It doesn’t end there. Jones went so far as to say that he’d rather suffer extreme physical pain than own Treasuries at this point.
If I had a choice between holding a U.S. Treasury bond or a hot burning coal in my hand, I would choose the coal.
The iShares Barclays 20+ Yr Treas.Bond ETF (NASDAQ:TLT) rose $0.06 (+0.05%) in premarket trading Friday. Year-to-date, TLT has declined -5.94%, versus a 0.31% rise in the benchmark S&P 500 index during the same period.
TLT currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #22 of 28 ETFs in the Government Bonds ETFs category.