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Should You Own Bonds?

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    Constance Hunter of AXA Investment gives her outlook for Treasuries.

  • Duration 4:19
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The heads of the CME -- also are watching this for your right now where less than ninety minutes away right now from the Fed's release of the Beige Book.

Will we see hints of QE3 coming our way -- hunt service AXA investment deputy chief investment officer joins me now 'cause this is great to see it.

They seem to show how big week for for options for treasury got -- -- this is million dollars being auctioned off the Beige Book could be.

A game changer what would you like to see out of the Beige Book today.

Well I'd like.

To see it look a little stronger than that FOMC minutes that we got last week because it's more recent information and we have this disconnect with the markets and the economy the past few days.

And not that the market discontent is completely unwarranted but when you really look at what's going on in the economy.

Were actually not doing that badly we're not doing great we're not doing that badly.

And so -- we had -- inventories yesterday were up and orders were up that's what she wanna see.

You know when you look at the last 66 months.

We have job growth of 205000.

This isn't Blockbuster put it's not Armageddon either or -- that this thing is.

Hope we get a better a rosier economic report from the Fed this afternoon.

Market participants on both sides are gonna hate -- know believe that we're not gonna get any more help any more bond buying from the bad that's one issue and number 20.

If you give a strengthening economy.

That means that maybe -- you back away from treasuries now.

Yeah I mean look there's there's still huge demand agents from.

Portfolios to have that safe asset and treasuries are really yet and we need just think about the fact that this is a refunding.

Ten years ago rates are much higher even if we see a back up after when he of thirty basis points which we don't think we will all in -- you know by this afternoon when they're auctioning this debt.

This is a good deal for the government had to be refinancing at the slower rate now in terms of long term more I would be in the fixed income space as -- -- more like high yield.

Where you're gonna get a wonderful risk adjusted return return especially compared to what's going on in equity Marquette.

And if you're worried about more.

Monetary easing and just the level monetary easing we've had so far then -- global inflation -- products is also a great place to be.

But -- the short term -- treasuries constant like the two year and the yields have actually been down over the last five days we've seen -- flight.

To -- if you well with the markets selling off a flight to safety for the short term treasuries so do you think that that continues.

If the stock market continues to falter.

Or is are another story her going on has -- lot of foreign investors have been -- been jumping on Libya US treasury -- -- recent.

Yeah I mean if we east continues -- markets faltering we will see that but what -- members we've also that we that comes out of Europe this morning.

We've had -- -- who is on the IE CB board saying that bear they should consider doing bond purchases.

Bond purchases this type of job owning.

Is kind of what the market's gotten addicted to unfortunately.

But it also is going to keep it -- long as we have that continuing from around the world and we do right now we have the Fed.

The Bank of England to the ECB and Bank of Japan all pumping liquidity and we're talking eight trillion dollars since all this all this started -- right a lot of money.

Before I let go costs like got to ask you about corporate bonds the other side of this -- -- he's not out what corporate bonds are you interested in that space a little more.

Whether its European and US Asia what.

Yes well.

I like the high yield space right now for the risk reward I also like investment grade US corporate investment grade is doing very very well on a total return basis and and global inflation linked bonds are also a great place to be right now we've seen companies like Kroger Idaho power mean is that neither you know -- standard US companies have seen to be going to the debt markets.

Ready for you know a little bit of a love from bond investors I was curious what you -- -- on that content that didn't.

Had we had extraordinarily strong here in corporate issuance we haven't seen a year like this thing and several years.

So it's a record issuance -- also record uptake here and if you think about the fact just demographically both in the US and Europe.

That as people get older they.

-- content covered bonds are great place to be.

We'll thank you for that question I mean there's always two sides -- trade in the bond market constant Connor AXA investment deputy chief investment officer gonna see constant.

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