“His income seems to go up quite nicely,” Fuss said. “I don’t worry about him at all.”
Fuss remains hopeful government bond yields will steady after rising to the highest in two years. At any rate, he’s not expecting anything like the levels of 1982, the last time inflation hit 7%.
Back then, investors weren’t even tempted by Treasuries bearing a 15.75% coupon, boycotting auctions as a way to protest against excessive debt levels. Would-be vigilantes these days have been muffled by the Fed’s massive bond-buying machine suppressing yields.
Fuss is still careful. If yields keep rising much higher from here, he’d prefer to cash out of long-dated debt before it mature -- an approach known as riding the yield curve.
“Once rising prices spill over into wages, my experience is that it could stay in the system longer than some are prepared for,” he said.
-With assistance from Denitsa Tsekova.
This article was provided by Bloomberg News.