The debt bomb is being set as UST10Y tags 2.896, what says UST10Y has to stop at 3%? Dalio: ‘We’re past the top in bonds,’ sees rising risk of U.S. recession

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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.”

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