How to Prepare for Rising (Really!) Treasury Rates – Bloomberg 06-29-12

Predictions:

Ibbetson Associates said that the next 20 years are not likely to yield a bond bonanza, favors stock investing – the S&P 500 stock index will return an average 7.6 percent, and long-term government bonds 4.1 percent.

Joseph Davis at Vanguard expects future bond returns to be muted, and stock returns formidable. Davis sees parallels with Japan, where interest rates plummeted more than 10 years ago and have yet to budge.

Chun Wang at Leuthold Group says long-term Treasury rates may fall even farther in the short-term, but could rise after a resolution in Europe – the upside from a short-term dip in rates isn’t worth the downside risk when rates rise.

William Bernstein says Treasury rates are not even keeping pace with inflation, and bond investors are looking at an extreme low return/high risk proposition so is staying with short-term (under five years) Treasuries and short-term high-grade corporate bonds.

Read the full article at http://www.bloomberg.com/news/2012-06-29/how-to-prepare-for-rising-really-treasury-rates.html