the bond market is starting to realize that Make America Great Again, really means make debt great again. the debt bomb is being set as UST10Y tags 2.896, what says UST10Y has to stop at 3%?
— Alastair Williamson (@StockBoardAsset) February 12, 2018
Dalio: ‘We’re past the top in bonds,’ sees rising risk of U.S. recession
Billionaire hedge fund manager Ray Dalio said the risks of a recession in the next 18 to 24 months are rising and bonds are past their peak.
In a LinkedIn post on Monday, Dalio said the U.S. is further along in the business cycle than he thought and that it’s difficult to make a call on equities.
“We don’t know exactly how far we are from the top in the stock market and then the economy, though it is clear that we are past the top in the bond market,” said Dalio, manager of the world’s largest hedge fund.
Dalio’s comments come after the S&P 500 index has posted its worst rout in two years on concern over rising borrowing costs. The pressure on equities has been emanating from the Treasury market and the outlook for inflation. The Federal Reserve will face growing pressure to increase interest rates after a nearly $300 billion spending package signed into law Friday juices a U.S. economy already souped up on a $1.5 trillion tax cut.
“There is a whole lot of hitting the gas into capacity constraints that will lead to nominal rate rises driven by the markets,” Dalio wrote. “We are in the part of the cycle in which the central banks’ getting monetary policy right is difficult and that this time around the balancing act will be especially difficult.”
While many investors are focusing on the U.S.’s potential economic strength in 2018, “we are focusing more on 2019 and 2020 (which is the next presidential election year),” he said in today’s post. “Frankly, it seems to be inappropriate oversight to not be talking about the chances of a recession and what that recession might look like prior to the next election.”
Anyone care that Interbank Loans, All Commercial Banks are plunging? But who cares do what CNBC says BTFD in stocks pic.twitter.com/2E9Sz2BcXm
— Alastair Williamson (@StockBoardAsset) February 12, 2018
debt bomb in America is set pic.twitter.com/HEGgYNDwYO
— Alastair Williamson (@StockBoardAsset) February 12, 2018