Bloodbath in Bonds!
I believe the “K-Wave” and its rippling aftereffects will dominate the global economy for at least the next three years.
It’ll create swirls, eddies and whirlpools in the investment markets that present dangers — and offer opportunities — you need to know about.
I call these global currents “megatrends.”
One of the things to be impacted are fixed income investments — like bonds.
Most investors look at their bond holdings as a safe harbor.
They take risks with stocks in the hope of future growth.
But they count on their bonds as the bedrock in their portfolios. The investments that can provide near-complete safety and a reliable source of income — especially in retirement.
But here’s a dirty little secret Wall Street doesn’t want you to know:
Bonds are among the RISKIEST places to put your money today.
Because the K-Wave is now approaching American shores, causing both consumer prices and asset prices to rise.
As of May, the U.S. inflation rate was 5% compared to a year earlier — the sharpest increase since August of 2008.
And as consumer and asset prices continue to rise …
Even if we avoid the “hyperinflation” of Weimar Germany, Zimbabwe or Venezuela …
The kind of rampant, widespread and persistent inflation we saw in the 1970s is a virtual certainty.
And with the price of everything going up, investors will dump bonds in favor of stocks and other soaring assets.
So, the Treasury will be forced to pay much higher interest rates on all new bonds to attract buyers.
Which means the price of the old, low-interest bonds you own today will go down … down … down.
And municipal bonds?
I don’t even want to think about it!
The pandemic and lockdowns have already left many American cities, counties and states in dire financial straits.
When the K-Wave strikes, it’s not unreasonable to expect that some municipal and state bonds will simply DEFAULT.
With out-of-control spending, massive deficits and growing inflation … investors around the world will avoid U.S. Treasury bonds like five-day-old fish.
On the day when there’s “no bid” for bonds, the Fed will be forced to raise interest rates …
… just so someone, anyone, will buy their paper again.
But as I’ve said, rising interest rates will cause the price of existing bonds to fall off a cliff.
And since government bonds are the bedrock of America’s pension plans … annuities … and 401(k)s …
The nest eggs that millions of retired people depend upon for income will simply vanish.
Not all bonds will default, at least in the near term.
But in the turbulent months ahead, there will be safer places to put your money … and even places that offer more reliable income.
I tell you all about them in my new report, “BLOODBATH IN BONDS!”
But it’s available to Wealth Megatrends subscribers only. Hop on board if you haven’t yet!
All the best,