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Tuesday, July 29th, 2014


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U.S. government bonds are the least-favorite asset of money managers

U.S. treasuries are not the favorite assets of money managers, according to The Associated Press.U.S. treasuries are not the favorite assets of money managers, according to The Associated Press.

There are various reasons not to like the financial instruments. They provide very little return and many market experts anticipate that they will lose value when interest rates start to recover from historically low levels. There are various reasons not to invest in the securities, but demand for the financial instruments remains strong.

Many investors expect that prices will fall for these financial instruments, the media outlet reports. This prediction has not materialized yet, and investors who wagered that the prices for the debt instruments would fall did not generate the returns they were looking for.

It is entirely possible that there is currently a “debt bubble” surrounding the U.S. treasuries. While demand for the U.S. debt is strong and the federal government continues to run deficits, this desire for the debt of the world’s largest economy might not be sustainable.

If investors suddenly lose their appetite for U.S. treasuries and the country still wants to operate at a deficit, default could be triggered. More importantly for investors, the returns of the securities could increase.

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