I thought I was bearish on government bonds, but perma-pessimist and contrarian Marc Faber makes me look happy clappy on the asset class:
An extreme bubble in US Treasurys has been deflated for the moment and yields are likely to rise sharply over the next years, Faber told CNBC.com separately.
“I still think that Treasurys are overpriced,” Faber said.
Yields on 10-year US Treasurys are likely to rise to between 10 and 20 percent over the next 5 to 10 years because of inflation and oversupply, he said.
There’s a lot of ‘forevers’ in Marc Faber’s recent commentary, which doesn’t endear me to him (he thinks real US interest rates will be zero ‘forever’, for instance).
Also, it’s a long time since we’ve seen yields of 10-20%. If you’re thinking “I’d have some of that!” then remember there’d likely be massive inflation in the same scenario, so the nominal yield might be high but the real yield much lower (think late 1970s).
Oh yeah, buy gold, Faber concludes as usual. But he’s not against stocks.
It all seems rather futile, given that in his view the Western world ends with an economic collapse. Why not spending your time partying instead?
(Source: CNBC)
