I think the best buy now is TBT. Why fight the crowd when you can join them. There will be a time for the mreits but not until the feds end QE. I am hoping they do that is September but I personally have lost all faith in those clowns. They'll probably 'taper' which will just bring in more shorts buying TBT until 10 year yields hit 4 or 5%.
And guess who is going to pay for the rising interest costs to governments? US taxpayers of course. Ain't schitty regulation great?
Well, at a 5% rate on the 10-yr, we'd be looking at $1 trillion in debt servicing costs, per year...Oh, I suppose we'd sell more debt to cover the interest too....hahaha...what clowns.
Part of me thinks that rates won't go too high...I just don't think the economy is strong enough to warrant higher rates...And besides, if rates did go up much higher, it might stifle the 'recovery'....leading to a drop in the markets, and money would flow into the bonds for safety...thus pushing rates back down. Oh, we always have these boom-bust cycles...and 5 years of artificial propping of the markets by the FED will come home to roost.
I wish they'd just end QE forever...let the stock market tank...bond yields would fall back...have a lil' recession...get it over with...let losers lose...and winners win...without govt interference (and get govt out of education / energy / healthcare...turn back the clock to pre-1964...)
ps...Of course, I don't see how the FED can ever stop from buying our own debt, due to the coming $60-100 Trillion in unfunded liabilities, over the next 20-30 years? And China and some others actually began selling some of our debt recently - With China's move to an 'internal consumption econ model' vs. an export model, well, they'll not need to buy our debt much longer...Perhaps they'll use their soverign fund to buy land , properties and companies instead...tangible stuff...vs, lousy US bonds. (so, I think at some point we'll be buying 100% of our own debt...to fund the bloated govt...i.e. can the FEDa really ever stop buying now?)
My money is on the taper. They're holding almost 4 trillion in assets that are losing value because they're loosing control of the bond market. If they keep buying more and interest rates go up anyway (maybe slower), they're toasted. Well they're toasted in every way because they're in balls deep. If they keep QE interest rates might be saved for the moment but they eventually have to stop and rates will sky again only this time their ugly balance sheet is bigger making them more insolvent. Shorting bonds is still good until at least Sept, than if they don't taper, there will be another opportunity to short again some times after.