Joining the likes of Bill Gross and Jeffrey Gundlach, and echoing his ominous warnings from October 2016, Bridgewater’s billionaire founder and CEO Ray Dalio told Bloomberg TV that the bond market has slipped into a bear phase and warned that a rise in yields could spark the biggest crisis for fixed-income investors in almost 40 years.
“A 1 percent rise in bond yields will produce the largest bear market in bonds that we have seen since 1980 to 1981,” Bridgewater Associates founder Dalio said in a Bloomberg TV interview in Davos on Wednesday. We’re in a bear market, he said.
Dalio predicted that the Federal Reserve will tighten monetary policy more than they have signaled, and said that economic growth is in the late stage of the cycle but could continue to improve for another two years.
The current economic environment is good for stocks but bad for bond investors, said Dalio, who’s chairman of Bridgewater, the world’s biggest hedge fund.
Treasury yields are once again legging higher today – back above 2.65%
And the yield curve is steepening back above YTD flat…
Dalio’s comments today build on his mocking yesterday, exclaiming that “investors in cash are going to feel pretty stupid.”
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