A certain asset is hitting record highs in prices. The only way its price can be justified is by using the most extreme and questionable economic forecasts. Despite the nose-bleed price levels, people just can't buy enough of them, while at the same time the amount of them to buy is also hitting record amounts.
Am I talking about houses circa 2005? Or tech stocks circa 1999? No, I'm talking about Treasuries.
The amount of money flowing into bond funds is poised to exceed the cash that went into stock funds during the Internet bubble, stoking concern fixed-income markets are headed for a fall.
Investors poured $480.2 billion into mutual funds that focus on debt in the two years ending June, compared with the $496.9 billion received by equity funds from 1999 to 2000, according to data compiled by Bloomberg and the Washington-based Investment Company Institute...
The new cash has helped fuel a rally and drove yields on investment-grade U.S. corporate debt down to a record 3.79 percent last week, while two-year U.S. Treasury yields fell to an all-time low of less than 0.5 percent.
When something is priced to perfection, when there is record amounts of it available, when people are still throwing their every dime at it, then that asset is in a bubble. Simple as that. Buying American bonds right now is a sure way to lose money in the near future.