What Bond Investors Are Most Concerned About

Tyler Durden's picture

Two weeks ago, before Yellen for the first time cautioned about the strength of the dollar and its impact on US "exports" (ironically, "strong" entirely as a result of the Fed's insistence that a rate hike is coming, ignoring the stall-speed Q1 GDP that may be as low as 0.2%), Goldman asked its clients what they thought was the biggest concern on their minds. The answer: the strong dollar.

They were right, and yet with the Fed boxed in a corner where it now has to hike rates or lose what little credibility it has left, the USD is likely to keep rising even more until the Fed has no choice but to admit defeat in its latest annual attempt to declare the start of renormalization, and perhaps to even go NIRP or do a QE4 trial balloon.

Of course, if and when the Fed pivots, it will box itself even more, this time as asset values soar beyond the merely "ridiculous" levels currently, and even further into uncharted bubble territory.

Which brings us to today's poll, courtesy of Bank of America which asked its bond clients what they are most concerned about. The answer, by a wide margin, "Bubbles in credit."

From Bank of America:

We asked high-grade investors what their biggest concern was for credit going forward (chart 1):

  • “Bubbles in credit” has jumped as the biggest concern (30%), having been third on the list in January’s survey,
  • Likewise “supply” has risen to be the second biggest concern (19%),
  • “Geopolitical conflict” is the third biggest concern (14%), but this is down from being the top concern in January’s survey,
  • Note deflation in Europe (the second biggest concern two months ago), is now down in 7th place (just 3%).

Not sure why of the master categories listed above "liquidity" is in, but if isn't, it will be soon. And if it is "supply" at just 19%, expect this number to soar in the coming months as a true market test reveals there is absolutely no depth behind razor thin bid/ask "markets."

Which is why the Fed is truly in a lose-lose situation, because on one hand the soaring USD will cripple what's left of the US economic recovery story, and on the other everyone is now admitting 7 years of unprecedented liquidity injections have led to the world's biggest, and truly global, asset bubble.

Damned if you do, Janet, and damned if you don't. Is it clear now why Ben Bernanke couldn't wait to get the hell out of dodge and leave the mess he left in the hands of someone else?

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Burt Gummer's picture

I don't know about you guys, but i'm going to go buy some greek bonds tomorrow at a discount. I have complete and total faith that I will get back my principle with interest.


SWRichmond's picture

I will say again, who gives a fuck what those who have benefitted and profited entirely from the central bank's asset-price-support schemes are "worried about"?  If they say they are "worried", is that not simply a polite way of threatening to start selling if the CB's don't keep on buying their inflated phony "investments" and keep them wealthy?

Fuck them.

Amish Hacker's picture

I think the real source of their worry is that they have benefitted from an enormously unjust system that is now on the verge of major change. If I were part of the .01% (Full disclosure: I'm not.) then I would worry that the new system might not have a Fed I can frontrun for guaranteed, risk-free profits, or a Justice Department that won't prosecute people like me, or a tax structure that favors income from dividends and capital gains. I would worry that the job market will pick up and I'll have to offer higher wages to attract employees, or that honest accounting will make a comeback, even in---gulp---my companies' pension plans.

There's lots to worry about if you're in the .01%, but the real problem is that when what you want is MOAR, you never get what you wanted. And that's what they worry about all the time.


JustObserving's picture
What Bond Investors Are Most Concerned About

What bond investors think has not mattered since the crisis of 2008.  The Central Banks are in full control.  We have NIRP in at least 11 countries now per David Stockman - who could have imagined that?

In corrupt, criminal, crony markets controlled by Central Banksters, facts are irrelevant - as are the sentiments of investors.  The last seven years are a testament to that fact.


Thirst Mutilator's picture

Ask the GM bondholders [circa 2008-9] what they're concerned about...

Chuck Knoblauch's picture

There are no worries.

Keep buying bonds.

It's good for you.

StupidEarthlings's picture

I'd love to know who these 'investors/Goldman clients' are.

Clearly seems more of an agenda of some sort. So risk of 'global conflict' declined since January? 


What about the 'market' being rigged? Gold /silver manip? Phony real estate prices..and nobody buying because of it? What about the bubble actually bursting?

No 'investor concern' about that?


brushhog's picture

I enjoy ZH but sure wish there were a few more investment ideas to along with all the doom&gloom forecasting. OK we get it, bonds arent safe, stocks arent safe, your bank account isnt safe, real estate isnt safe etc,etc...so what do you suggest besides buying gold? That cannot be the solution to everything all by itself. Buying gold may have its place but its not a complete investment strategy.

Why doesn ZH start discussing some solutions that readers can avail themselves of, instead of just telling us everything that is wrong with the world.

Mister Delicious's picture
Mister Delicious (not verified) brushhog Mar 29, 2015 11:38 AM

weapons manufacturers.

Neochrome's picture

Apparently,if you bought a cow short time ago your investment would double by now, so...

nakki's picture

I agree that everyone can bitch about the worlds problems, but without solutions its all just bitching. Here is an example of what I see as the biggest problem, GREED at the very top. Money or fiat creation going to the very very top without it benefiting the majority. Here's a little example

"More than anything else, Tagliabue took over a league that already had already become America's game under Rozelle and took it to the next level, enriching it and restoring labor peace.

In many cases, he turned millionaire owners into billionaires. The value of many franchises has increased tenfold since 1989 -- those worth $70 million then are worth $700 million now."

The delusion here is that someone anyone created billionaires other the the FED through fiat creation. I hear talking heads sucking of the commissioners of major sports leagues in this country all the time. Like David Stern made the NBA. What made all these people, and these leagues amazing amounts of money was funneling huge amounts of money to the top corporations which in turn paid for this huge increases in teams worth, players salaries and commissioners pay (advertising, corporate boxes, tickets, and TV contracts). I remember way back in the 70'S the sports page had a "millionaire" club, listing those players with million dollar contracts. Those contracts could have been 2-3 years. Today we see players getting 250 MILLION dollar deals. Baseball players making $30 million a year. Sure some of its from globalization, but without massive Fiat printing none of this would be possible. 

In 1990 David Stern made $3.5 million dollars in 2010 he made $23. Was his job 8x harder 20 years later? Did he work 8 times harder? Last year the commissioners of the NFL A NON FOR PROFIT ORGANIZATION made $44 million dollars. Are you kidding me $44 million dollars

My point is that over the last 40 years the top .001% in every aspect of society taken way more than there fair share. Its the way the fiat has been distributed with every new crisis that has caused these problems.

Until we have a more equitable distribution of where the top 60-70 % of the population can enjoy the paper printing we'll see more pain. 

nakki's picture

Subprime nations yielding 1.3% on 10 years. Banks, nations, corporations in all reality are bankrupt. So we get defaults or an insane amount of printing. Either way it won't be good for 80 to 90% of the populous. Almost all nations will become third world countries. No other way around it. 

In the US 80 million will be receiving benefits over the next 20-25 years that will kill any growth. How many corporation count on government hand outs? MIC, Big Farma, big agriculture, hospitals, universities. Add this all up and its all unsustainable. 

Either the top .001% start leveling the wealth distribution or Bastille day is coming down and hard within the next 20 years.

stant's picture

I maybe wrong in my thinking but I have been putting back us coins of all denominations. Us coins are issued by the treasury and have no counter party risk that paper dollars do. I could see a time when they would have value if things go like I think.

brushhog's picture

just for the metal value? Could be a good idea, since it already costs about 11 cents to make a nickel and something like 3 cents to make a penny. The value of the metal is exceeding the value of the coin. But for that matter it might be more efficient to just collect raw metal.

stant's picture

Well I do that too ESP brass and copper scrap but my biz involves that and I get it for free. Sometimes give it to my kids for extra walking around money.

Sorry_about_Dresden's picture

Do you trash vacant houses or are

a plumber?