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According to Bob Prince of the hedge fund, the recent sell-off of U.S. government bonds could "threaten high-flying assets" such as cryptocurrencies. Bridgewater Associates co-CEO Prince links the impending downturn of the $21 trillion Treasury market to the economy's improving health as well as a growing inflationary pressure.
This combination of factors, according to Prince, may force the Federal Reserve to reconsider its stimulus measures. Still, as one report explains, the Federal Reserve policymakers are “brushing off the Treasury sell-off as a healthy reaction to the budding U.S. economic recovery.”
Prince asserts that the "surge in cryptocurrencies like bitcoin is a result of the loose monetary policy provided by the U.S. Central Bank, coupled with the stimulative policy put in place by the U.S. Congress."
While high inflation expectations have hit U.S. government bond prices and forced up their yields, the report also indicates that a decrease in consumer prices caused the bonds to fall in price. As a result, “Television companies such as Netflix, Amazon, and Tesla have seen their valuations inflated as a result of low rates.”
While foreign investors, one of the biggest buyers of US Government debt after the Fed, are showing biting back on purchases of U.S. government bonds as their losses mount. The rate on the 10-year Treasury recently rose above 1.6 percent from 0.9 percent a year ago.
Based on Ice Data Services, “Treasury investors have had a terrible quarter in the past four years.” Does Prince's classification of cryptocurrency as an asset of high-flying value agree with your view?
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Image Credits: Shutterstock, Pixabay, Wiki Commons, FT, Bloomberg, ICE Data Services,
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Disclaimer: See disclaimer . Bob Prince, a hedge fund manager, has warned that the recent sell-off in U.S. government bonds could accelerate, thus “threatening high-flying assets” such as cryptocurrencies and blank check companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Prince believes these two factors could lead the Fed to rethink its stimulus measures.
