Has a bubble really built up in bonds - and how can expats protect themselves?

The Bond market has never looked more bubbly - the iShares Barclays Aggregate Bond ETF (AGG) generated a cumulative total return of more than 23% since the end of 2008. Commodities guru Jim Rogers has tried, at least twice that I know of,  to short bonds (and lost each time). In the men time, sovereign bond yields continue to go lower, the 10-year US Treasury bond yielding around 1.7%, Germany's 10-year yielding around 1.3% and Japan's about 0.6%. In Europe inflation for April fell to 1.4% (per Eurostat) further keeping bond yields low and inflating the bond bubble further. Bill Gross of PIMCO, in his latest newsletter has advised his investors "to continue to participate in an obviously central-bank-generated bubble but to gradually reduce risk positions in 2013 and perhaps beyond" - which is quite possibly the best advice you can use today. My only additional comment would be to reduce risk positions - not gradually as Bill suggests but to do it as quickly as possible. A well structured offshore bond will be the best vehicle to do this.

Thanks to proposed ECB negative deposit rates Euro may go through a massive drop - what should expats do?

Austerity obsessed ECB lowered its main interest rate this week from 0.75% to 0.5% but along with this cut caused a stir about whether the bank might also cut the deposit rate, taking it into negative territory (which would mean banks having to pay for leaving money in the facility and would ostensibly push banks to lend more rather than hoard cash). ECB dropped hints on the negative deposit rates to express their frustration with banks that are hoarding cash and not lending. Clearly at the ECB, the money printing carrot does not seem to be enough to revive the moribund European economy so now this stick has been added to the equation. The unintended consequence of these negative deposit rates would be to put enormous downward pressure on the Euro jeopardizing the value of Euro denominated assets. Expats should look at reducing this risk by diversifying their portfolio through exposure to US dollar denominated assets. The most suitable vehicle for this type of optimal diversification would be an offshore bond.