Tapering Is Not Tightening

Sometimes, when the markets look their worst, it is precisely the best time to be a buyer. The post-Fed blood bath in the Treasury market might be one of those occasions. Although the Treasury market offers little in the way of yield, there could be an argument for price appreciation and, better yet, a hedge against what are typically highly volatile summer equity markets. Naturally, some would argue that Treasuries themselves can be a dangerous investment should investors all run for the exit all at the same time. And this is exactly what has taken place in recent weeks.

I will admit that I began getting positive in Treasuries far too early into this selloff, but everything I look at brings me to the same conclusion. The recent weakness in government backed securities is more of an emotional reaction than a fundamental one. After all, as recent as Wednesday's press conference the Fed has made no actual changes in its monetary and stimulus policy; they will continue to be large buyers of securities. When they do begin to "taper" at some point much later this year, or into next, it is being described by Bernanke as "pulling the foot off the gas but not braking"....473 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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