Common sense tells you the march higher in bond prices should be nearly over, doesn’t it?
After all yields are at or near historic lows.Considering yields and prices are inversely related, the next big move should be higher yields and lower prices.
The trade is short bonds, ahead of the decline in prices, right?Although the thesis sounds logical, CNBC’S senior analyst Ron Insana tells us it probably won’t play out that way.
He says there are too many mitigating factors that will put a bid in the bond market. They follow:Insana’s Top 5 Reasons Not To Short US Bonds
1. Thick as a BRIC BRIC countries are not doing well
2. Spanish Flu 2 Spain is infecting Europe.
3. China Hitting a Wall The Street doesn’t realize how serious the slowdown is
4. Sell in May and Go Away This happened both in 2010 and 20115. Big Ben isn't Ringing Don’t go for the big short in bonds until Ben Bernanke, Janet Yellen and William Dudley all say QE3 is off the table.Source: Ron Insana, CNBC Senior AnalystAccording to Insana, these five factors will put a floor under prices. As a result, he does not advocate a short position.
Now you know what not to do – but what should you do?Insana says scale into equities. He likes stocks such as Microsoft, IBM, Intel, Starbucks and McDonald’s – companies with a strong global franchise.Page 1 of 5 | Next Page