U.S. Bonds Still Safe Investment, PIMCO's Fels Told Bloomberg TV
NEW YORK (TheStreet) -- Although the U.S. yield on the 10-year Treasury note has fallen significantly recently, bonds are still safe havens investors should turn to, PIMCO global economic advisor Joachim Fels said on "Bloomberg Go" Thursday morning.
"Now of course it seems painful to buy bonds at these low yields, but bonds still offer diversification in otherwise risky portfolios," Fels noted.
Even if an investor owns a negative yielding bond, if equity markets tank for example, there will still be price appreciation for that bond.
"So I think investors are buying bonds at these low yields to give them that diversification," Fels stated.
"Is there some kind of yield level on the 10-year in the U.S. that if we get to that it's going to trigger the opposite and sort of the sell-off in markets?" Bloomberg TV anchor Alix Steel asked.
"I don't think there's any particular yield level. If you look at U.S. yields in isolation, yes, they are very low, extremely low by historical norms but I think the way global investors are looking at it is U.S. yields still offer relatively attractive levels compared to what you get, or don't get, in Japan and in Europe," Fels replied.
Fels predicted that U.S. bond yields will likely fall even lower than they have been.
The U.S. yield on the 10-year Treasury note is flat at $1.54 late this morning as Japanese bond yields fell below zero. The U.K. 10-year is flat at 0.82 per U.S. dollar after TheBank of England's (BoE) decided to hold its interest rate at 0.5% instead of cutting it to 0.25% as was expected.