Treasury Market Predictions

[7:59] I have a real hard time owning bonds for the long term.

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[29:39] That's a joke. I mean, China sold treasuries. They certainly did. Did the world end? It did not. Not that I noticed. So, you know, people like to manufacture um these calamities cuz they want to be the ones who predicted that the rest the end of the world.

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[3:27] We're now 6 years into what I think is now a you major uh bare market, a secular bare market that will last at least half as long as the bull market. So maybe 20 years and we're 6 years into it.

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[21:00] I I would think that all paper dollar-denominated assets um, facing a very difficult future. And, uh, you know, just the regular financial people, um, you know, when they look at it, they say, "Well, based on the returns in stocks over the last 10 years, we anticipate a very low rate of return on stocks over the next 10 years." And the same thing with bonds

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[20:01] I think that liquidity is going to get better and is going to start doing well... I think it's going to start getting better and so this will be one of the confirming signs I'll be looking for as we get into October and November is looking for junk bonds to start doing better

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[10:51] From the from the good end I would say that you know, bonds you know, treasuries and so on looks very mispriced, but that's because they're too cheap at this point here.

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[27:46] with all of that negativity on duration, for the first time, I'm seeing some people in the chat um and at the dinners starting to tip the put the really just start to buy duration... I think that you you want to start at least thinking about buying long-term bonds. uh the TLT ETF.

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[31:32] I would say 80 to 90% price dent because the sentiment on bonds in positioning, if you look at CFTC data, if you look at any kind of survey days, bulls versus bears, I mean it is I I'm just blown away... The bearish sentiment on bonds is in extreme places and you got to be very careful being a bond bear with with that kind of sentiment being that negative

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[19:42] 80% of the time you get a huge rally in the Treasury market. now now maybe it'll be different this time but I think that you can certainly bet with a high degree of confidence that you will get a rally in the front end of the curve as we're seeing taking place already. I think this is the thin edge of the wedge.

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[23:12] I think rates are are going to stay up for a while and I think they could drift higher a little bit out of control and that's going to keep pressure I think on the bond market... I think the bond market is very nervous that rates could keep going higher and then we're going to see you know tips we're going to see uh like TLT long-term bonds continue to be under pressure and move down

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[1:46] I was like uh looking for commodities to start like a bull market about six years ago and mainly because uh I expected the bond market to uh to be in a bare market starting in the beginning of the this decade around 202021 uh mainly because uh the bond market had been in a bull market for 40 years since 1981 and nothing lasts forever.

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[6:19] The interest rates are going much higher and that means that the bond futures are going much lower and the way to play that market in my opinion is to sell the futures indicating that you believe that high interest rates are coming cuz I do.

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[7:28] That that AI paper is not high quality debt. That AI paper is garbage... all of this AI spend, which has got not a shot of adequate return on investment to to pay the debt back or or make any kind of an adequate return. I mean, that that stuff could blow up.

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[2:35] you're going to see that bonds are going to rip. You're going to see also that the stock market is going to find a top within the next quarter

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[31:41] my projection, if I'm right and we get a very serious downturn, TLT would literally double in value in just two to three years.

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[24:55] I think bonds are very very cheap. Like, if I look at five-year yields, I mean, given everything's going on, do I really believe the Fed is going to be hiking rates? I mean, like, so I mean, I don't see any inflation and I think growth is actually slowing. So like I I kind of feel like being loan bonds at least

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[23:19] I I I I think we're in a bond bear market. I've been saying that for years. We're in a bond bear market. It is global and it follows the epic possibly the greatest financial bubble in the history of bubbles in terms of dollars when we had $18 trillion of negative yielding bonds. This is the flip side of that and I think it continues in the years to come.

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[28:10] bonds for an asset class have been dead for 5 years. And I think without a a a meaningful change in fiscal policy and a meaningful change in monetary policies uh in in the western world uh I think bonds stay dead.

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[0:23] I don't have a very bullish outlook for equities and clearly as well for bonds.

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[8:56] I think the market should be paying very close attention to the volatility in the Treasury market right now. Um things are going to be very bumpy

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[23:28] Best I think the final my focus remains. US Treasuries might grab alpha this year. haven't been right yet, but that 5% long bond I think is going to just we're going to look back and say yeah was your last chance.

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[30:07] It's hard to say if it breaks the market rally. It It makes me more bullish on bonds than most other people because I think all the concerns about fiscal policy are going to be redressed. Um because I think the fiscal large is going to be I think we're going to have fiscal inertia.

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[7:31] for right now, these things are, you know, probably going to be longer gold, longer government bonds, longer emerging markets, you know, and less long US AI stocks and semiconductors at this point.

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[13:41] Like gold like I I'd argue like treasuries themselves long duration which has been the worst place to be worst bare market in history for treasuries which is actually bullish going forward

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[35:00] we do kind of expect banks to be US banks especially to become larger buyers of US fixed income especially at these higher rates... we do think that um that there's a a domestication happening of the US bond market away from foreign investors uh and that will be where most of the demand's going to come from going forward.

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[7:54] I think the next few few months inflation will go higher, at least the way we see it. So, there's the bonds will probably be under more pressure in our opinion.

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[5:33] sovereign bonds particularly long-term sovereign bonds have stopped being the reserve asset the safe haven that gave you a cushion of return in an environment of weakness that the 6040 portfolio used to provide. You need to look elsewhere for that 40% uh out of out of equities.

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[19:21] I think bonds will be a good place to be. You're not going to make a killing, but I think that uh you'll do fine.

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[28:29] Now since since that chart we've dropped down to 112 area. you get down around 111 in price, which is that upper chart there. You can see it's probed down to 10750 back in 2023, but then there were two lows down just in the 111 since then that almost got to 110. You go back down to the 111 again, you're not going to hold. Okay? And I think you could get a mini panic.

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[14:56] So I would say bonds would are more likely to suffer than any other asset class out there.

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[35:52] The risk you should be concerned about right now is not recession, depression, interest rates going down. Owning bonds, having 40% of your portfolio in bonds does not hedge you against that risk.

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[24:12] We see one of the largest ever short positioning in TLT in history. Well, I'd be long fixed income.

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[32:34] And I think that you're going to find that the much maligned, ignored, despised treasury market is going to be the one market that is going to be delivering equity-like returns over the next 12 months.

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[16:08] I think the only area to really be in you know likely is the area which everybody hates which again is treasuries and probably more on the long duration side. Everyone suddenly forgot that the pristine asset long duration treasuries tends to act like the best place to be when everything falls apart.

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