Global Bonds Sentiment

[gzbkel]

Like to ask VB's opinion about buy 10 year US treasuries at this point in time (About 4.4% yield)

I understand that buying long dated bonds is akin to speculating on interest rates, since you will get unrealized losses if rates go higher.

My reasons:
- Personally I try to keep a 50:50 bond to equity ratio, and so far my "bond component" has been mainly 6-month SG T-bills. The problem with T-bills is that you don't get capital gains in the event of a interest rate drop. Role of bond component is to get capital gains in the event of recession, leading to higher bond prices due to lower rates, thus offsetting losses in your equity component. So I want to move some of my t-bills to longer dated treasuries.

- US 10 year bonds has better liquidity than SG 10 year bonds. This is important if I want to rebalance in the event of a recession causing equity sell-off and bond price increase. There is of course forex risk.

- US 10 year bond liquidity seems good enough that I don't see a need for a ETF that charges annual expense. And default possibility should be near zero for sovereign bond, so there should be no need for diversification.

- My gut feeling is that inflation rate is unlikely to be more than 4% for the long term. I am prepared to hold for the full 10 years if necessary to get back my capital. I could be wrong, but risk reward doesn't seem bad at current yield.

Are there any holes in my reasoning?

If i have the intention to hold for 10 years, i would rather buy berkshire hathaway at today's price. The 4.4% yield of the 10 year bond, after paying taxes, i believe works out to be about 3 point something yield. Overall little upside, a lot of downside

Hi money. My policy is to hold some bonds in my portfolio. I do not do 100% equity allocation.
So my question is more about the merits of buying us 10 year Treasuries vs other types of bonds.

I do not think there is any tax on us treasuries interest income.

Can you elaborate more on the downsides you see?