Strong Real Estate Trumps Treasury Yields

Political guru James Carville said: “I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.”

Indeed, the US bond market’s appeal last week to global investors in the face of sovereign debt crises in Europe, collapsing public equity markets, S&P’s antics, and disappointing financial news clearly demonstrated fierceness reminiscent of Hulk Hogan. While fans of the US bond market, like fans of pro wrestling superstars Hogan and The Undertaker, are willing participants in a charade, there is something to be said about a 30-year bond yield of 3.7% in spite of the S&P downgrade. Many prominent Wall Street economists are currently forecasting the 10-year Note to fall below 1.95% in 2012!