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UBS Getting Bearish on Bond Market?

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  • Description

    FBN's Charlie Gasparino on UBS's change in its investor classification system.

  • Duration 4:22
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Well as a big brokerage firm UBS getting bearish on the bond market some brokers inside the company do you think -- -- A new investor classification.

System is calling those investors -- heavily invest in bonds aggressive Charlie Gasparino joins us with more.

We're trying to change anything at the last minute -- -- -- and we -- get into that.

You know you look for signs of bearishness to bullishness -- -- market going to 141000 today -- bond yields are starting to go down a little bit.

Are we in a secular bull market we got interest rates really low.

Here's something interest in coming at -- UBS UBS is a big brokerage firm they have 5000 brokers and one of the big ones.

They have.

Hundreds of thousands of clients do the small investors they are now planning a change in their investor classification system.

More investors are going to be moved from what's known as the conservative classification.

Too aggressive and this is big to speak for companies between -- investors are gonna be alerted by this.

In March from what I understand.

What is prompting us now here's what I I'm hearing from brokers inside UBS what is prompting this is a more bearish term.

Quantitative easing if you have a longer term for -- -- most small investors do.

Over next five years quantitative easing has -- as the stop which means you stop buying bonds prices go down yields go up.

They're basically saying.

Be you be prepared for a bond market -- that the long thirty year.

So we basically had a bond market rally can look at charts right about thirty years that that may be coming to an end now.

This is what brokers inside UBS -- tell me.

I talked to the management -- give me a little bit of a different story when it comes this reclassification no doubt this reclassification is in effect if you are a UBS customer.

And -- it -- a chance I don't know how good it is but there isn't there's a chance more than a theoretical possibility.

-- you're gonna get a letter of march that says you've been reclassified now based on your portfolio.

From a conservative investor.

To be aggressive investor.

The -- the management says this is not a sea change in our view on the markets are on the bond market -- -- we do worry about volatility in the market and that's what we're doing this thing.

But there's something interest -- going on inside this are not -- brokers who -- -- -- small investors don't -- act enough that they are telling me.

This is UBS put its stamp basically on the fact that they believe the bond market rally is running out of -- Given a target on that like a ten year benchmark -- -- 25 handle what -- Wayne Parent to.

-- to 2.2 5% on the tenure at 225 hands I feel like complete total Larry mcdonalds here about.

OK the 225 -- -- -- about -- and I didn't I didn't I have no idea -- given.

What I know I do know this the reclassification occurred in late January.

I do know this -- investors that -- that our clients.

Why is that there's a lot of clients of UBS they're gonna be reclassified from conservative to to some more some of the aggressive categories is moderately aggressive and and and aggressive.

The brokers inside the -- say that is reflective of the of public more bearish view of the bond market that's the firm itself is telling me.

What were we -- -- views were worried about volatility in various things it's not just bonds and stocks as well.

Whatever it is I'm Tony what's going on inside this company clearly.

When you doubt it's 141000.

Right out of 141000.

Treasury we know that money start to flow into stock mutual funds -- -- into bond funds but if you look at the thirty year bond yield.

It's going it's going up that means prices are going down and you see this reflected people thinking.

Bonds are -- start to get out there and people should be moving into stocks and if you put leave your money into bonds.

-- him to roll the dice a little bit here and I think that's -- the brokers are saying it's an interesting way to think about.

I'm calling about the calling for the great Rite -- to take -- bank will allow Ponzi you're considered conservative.

At this level purity average guy out there you have to -- you have to think.

With interest rates where they are.

You know.

At some point they got a reason raise them are you still conservative if you were in the odds of that positive inflows into mutual funds to put -- how much -- what to do now how many -- but the trends -- you know.

Creating a very clear picture Charley thank you thanks --

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