More Woes May Loom For Bonds --- Many Investors Stay Sidelined, Awaiting Sell-Off by Year End
While some investors are starting to look favorably on bonds for the first time in months, many are hanging back, waiting for one more sell-off to drive up yields between now and year end.</br></br>The selling would come from money managers who have hung onto money-losing bonds all year in the vain hope that interest rates might ease and whittle their losses. Now the managers face growing pressure to take their lumps so they can begin the 1995 performance derby with a clean slate.</br></br>"We could be looking at the final bondmarket blow-off," says Theodore E. Ake, head of government trading at Kemper Securities Inc. of Chicago. Last week he and his colleagues discussed their fears of just such a sell-off during a meeting of Kemper's risk-management committee.</br></br>As Mr. Ake puts it, "A portfolio manager under water is asking himself, `Why carry the loss into 1995? Why not start 1995 fresh?'"</br></br>Friday certainly brought a wave of selling. Long-term bond yields jumped to their highest level in more than three years, as news of strong job gains provided more evidence of a robust U.S. economy. The benchmark 30-year Treasury bond yielded 8.15%, compared with nearly 8.10% Thursday.