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U.S. Treasury Bond Market Collapsing Now!

InvestorEducation / US Bonds May 24, 2009 - 06:02 PM GMT

By: Money_and_Markets

InvestorEducation

Best Financial Markets Analysis ArticleMartin Weiss writes: My mission is to worry so you don’t have to.

And I’ve never been more worried than I am right now. At the same time, though, I’m also more excited than ever about your opportunities to grow your wealth.


I’m proud of the fact that, for nearly four decades, my company has established a distinguished record as “the first to warn of the dangers and say so unambiguously” (New York Times).

And right now, it’s clear that the current dangers are unfolding as we anticipated. Indeed, beginning nearly three years ago, we laid out this scenario in no uncertain terms:

First, we warned you that the mortgage bubble would burst and that most of the banking and real estate sectors would be crushed. It happened.

Next, we warned you about the second phase of this crisis: Massive losses in the banking sector and a credit freeze, spreading like wildfire throughout the economy, killing corporate earnings, sending unemployment through the roof. That’s happening now as well.

And just over two months ago — in my Safe Money Report and in a white paper I delivered to Congress — we warned that the third and most destructive phase was about to begin:

A Bond Market Fiasco!

We warned that

  • The federal deficit would balloon toward $2 trillion and beyond, flooding the market with Treasury offerings …
  • Washington’s efforts to bail out giant companies would make global bond investors recoil in horror …
  • Treasury bond prices would plunge and interest rates would surge — pure poison to the entire U.S. economy and stock market.

Now, this has happened too!

The Third Phase of This Great Crisis Has Kicked in With a Vengeance

Treasury-bond prices collapsing! Right now!

Just in the past few days …

Moody’s raised serious doubts about the U.S. government’s credit rating.

The manager of the world’s largest bond fund predicted that America’s credit rating could be slashed.

Treasury secretary Geithner warned of the dangers of record-shattering government borrowing.

And even the Fed, despite all its buying power, was overwhelmed by the avalanche of Treasury bonds being dumped on the market.

Result: Bond prices crashed. Interest rates surged.

A Unique Convergence of Events

If all of these events can tell you anything, it’s that you now have the kind of opportunity that generations of investors could only dream about.

You have the ability to read the handwriting on the wall; to know in advance what is most likely to happen next.

Treasuries bond prices are already sinking. Long-term interest rates are already rising. Just since December alone, the yield on the 10-year Treasury has soared 50 percent (1.5 times its prior level).

This is the recipe for disaster I’ve been warning you about:

  • Even before the interest rate rise, mortgages and consumer loans were already scarce.
  • Even before the rate rise, the official, greatly understated unemployment rate was already at 8.9 percent, on its way to 10 percent.
  • Even before higher rates, consumers were scared — delaying or cancelling major purchases.

Now, rising interest rates are about to kill what little consumer demand is left in the U.S. economy — a perfect storm for corporate earnings and the U.S. stock market.

It’s time to ask yourself, “If not now, WHEN?”

With the handwriting so clearly on the wall … with America’s credit rating now being called into question … with the disastrous implications so clear for the stock market this summer and for the rest of 2009, you should be asking yourself:

“If I don’t act to seize this opportunity now, how will I feel when these contrarian investments soar in the weeks and months ahead?”

Bottom line: If you haven’t done so already, buy the contrarian investments we’ve been recommending.

Good luck and God bless!

Martin

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

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