Putting a Stake in the Bond-Bubble Brouhaha

At long last, we're starting to get notable push-back on all of this bond-bubble foolishness.

First, Felix Salmon last night made the quite simple, but cogent, point that low yields are justified by the fundamentals, unlike, say the P/E ratio on Pets.com in 1999:

"Treasury yields are indeed low right now, but that’s largely because the economy is weak."

What a concept!

Then, Richard Barley's Heard on the Street column in today's WSJ drives home the most important point of all in this discussion for investors:

"Suffering a manageable loss on holdings of Treasurys if the recovery continues and yields rise may be preferable to sustaining a large loss on stocks or other risky securities if the Fed fails."

Quite right. There may not be much more upside to bonds, but the downside risk is manageable and far preferable to the risk on the other side.

And we caught a glimpse of that downside today, with a surge in jobless claims to 500k -- in the payroll-survey week, raising the possibility of a negative payroll print in August -- and the drop in Philly Fed's factory index back into negative territory.

This is double-dip stuff here, and the 10-year is right to be at 2.575%.

Updated:

And later today Rosie just straight-up turned a firehose of fact on the bubble-spotting tomfoolery of Jeremy Siegel and Jeremy Schwartz:

The case against the bond market that was made was pretty weak, which goes to show that just because you have the pedigree of being a professor from Wharton doesn’t necessarily mean your call on the Treasury market will prove to be any more prescient than your call on “Stocks for the Long Run.”

Ice cold!