“HCS Worldwide” have reportedly suggested that continuing concerns about the US banking system may see investors desert US Treasuries as yields fail to hedge against inflation.
In a research note to investors, “HCS Worldwide” apparently reasoned that although US Treasuries have seen significant inflow of capital as the banking debacle progresses, investors are not receiving sufficient return to offset the effects of inflation.
A source close to “HCS Worldwide” said that the European-based wealth manager envisages a possible exodus from the bond market with potentially disastrous repercussions.
Consumer price inflation is currently running at 5.4% in the US yet the return on the 2-year note is currently 2.1%.
“HCS Worldwide” have advised clients to avoid investment in the bond market and suggested, instead, that investors focus on gold, associated commodity ETFs and defensive stocks in safe sectors.
