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Are Investors Willing to Take On More Risk in Treasuries?

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  • Description

    Vanguard principal Bob Auwaerter weighs in on the bond market.

  • Duration 4:46
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Well investors for some time now have been pouring money into treasuries you actually see it coming out a little bit today people willing to take on.

A little bit more risk but will this last -- do we ask about bonds Bob all -- of course -- Portfolios.

Our received more than 600 billion dollars in fixed income asset.

Bob the last time you're here we talked about the appetite.

-- just talk about the bond market in general appetite for yield your assets.

The -- willingness to take on more risk are you seeing that fade this spring as as we have in recent years.

-- think there's definitely a lot of concern about what's going on in and Europe again were running in -- situation news.

The jumps between Greece and -- -- Italy and to Spain and I think there's.

Legitimate concerns.

About the Spanish economy -- this high unemployment rates.

And whether.

At least at this point is -- been able to our roll over its debt put at what point does the market.

Begin to take that that capability away so and those type of situations.

There there.

The many bond investors run on the mom -- that's that's the US treasury market so that's what you seek going on currently.

That's -- the push poll that's been going on because just in the last several weeks we saw a jump up and yields and then yields falling back below.

That 2% mark now they're up a little bit on the tenure today -- do you expect them to -- -- and I'm not -- -- a time frame on it to trade within this range and for how long bomb.

Well on my mind to thing that I keep looking at is what's gonna happen is we approach that -- the end of the year obviously got a presidential.

Election we have the expiration of the two series -- -- bush tax cuts the expiration of payroll tax cut.

The expiration the extension of unemployment insurance and a few other things which would crew me.

Enormous drag on the economy.

We -- -- -- buckle close to.

Hi 3% so -- GDP now it clearly some of those things are gonna be rolled over but.

Bill I think there's me a lot of volatility in the marketplaces are gonna happen during the lame duck session who gets elected in November it.

If Romney gets so elected -- is congress -- Until the first quarter 2013.

If the president gets.

Our reelected they try to do some.

Gonna have all sorts of volatility.

And uncertainty.

Going on in those type of environments.

People -- to being -- If you look at some of the other classes of -- staying calm I was looking at your average high yield mutual fund.

Up 5% year to -- high yield municipal fund -- five and a half percent.

It was -- you see the greatest.

Potential downside of the greatest risk or overvaluation among all love your fixed income classes.

Well.

-- -- you do point now that positive too high yields -- perform pretty well they've given up a fair amount the last.

Month or two I think despite -- very nature of the size of those markets and -- and how -- the cash flows are.

They're there going to be the ones that are going exhibit the highest volatility.

Going forward now high yielded investors.

It's probably fair.

Value that this point but the one nice thing going forward is and general.

The credit fundamentals of high yield day issuers -- one average or better knew what they have been so there's a little bit of a tail wind there.

Which I think will help out high yield performance going for.

Bob one last thing in terms of -- you can really see how individual investors are acting.

Because you -- so much money are you saying -- shifted all in investors' appetites and with what there.

Willing -- what they want -- We generally seen much volatility and the cash flows across the different asset classes in general -- we've seen.

Some study.

Money.

-- and and.

So -- Lisa as far as vanguard shareholders are concerned had been pretty well behavior has been big swings back and forth.

Bob it was great to see thank you so much I was gonna make a joke that if they were well ahead you would make him the day but I'm -- Thank you not have great that they are good that you've seen as well Bob -- In overseas.

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