Are long bonds the ultimate safe haven investment?

ON BONDS

RWC Partners' Peter Allwright and Stuart Frost discuss the outlook for 30-year US treasuries

Having peaked above 15% in 1981, yields on 30-year US treasuries (long bonds) fell to 2.5% at the end of 2008. With yields currently around 4%, debate rages about whether long bonds are in a bubble or represent the ultimate long-term safe haven investment. The US economy will eventually re-inflate and recover; interest rates will not stay low forever. Increased supply and concerns over the credit-worthiness of the US will undermine confidence in long bonds. The ongoing de-leveraging process and its deflationary impact still have a long way to run. An ageing population and lower long-t...