Courtesy of Mish.
I happen to like 10-year US treasuries here, and have since rates got near 3%. I believe job growth is way overstated due to double-counting of part-time jobs, the global economy is slowing more than economists expect, and the US economy is slowing more than economists expect.
Betting Against Treasuries a Fool’s Game?
Jeffrey Gundlach CEO of DoubleLine Capital goes even further. Gundlatch claims Betting Against Treasuries a Fool’s Game.
The market was “entering 2014 struck by a greater consensus entering any year that I can remember, that the dollar has to do well, gold is for losers and bond yields will rise,” said Jeffrey Gundlach, chief executive officer of DoubleLine Capital, which manages $49 billion. “Things were so lopsided in terms of that positioning. That was late in that way of thinking.”
The amount of bets against 10-year Treasuries by hedge funds and other large speculators shrunk to as low as 58,000 contracts last month from a 19-month high of about 189,000 in November, data from the Commodities Futures Trading Association show.
Mr. Gundlach predicts yields will fall in 2014, with demand rising from investors such as banks seeking high-quality collateral to meet new regulatory requirements and as a haven for others from political and economic turbulence in nations ranging from Turkey to Argentina.
Gundlach (Bull) vs. Rosenberg (Bear)
One long-time bond bull recently turned bearish, and he sees no reason to change course. Yields will reverse and end the year at 3.5% to 3.75% as the economy improves, according to David Rosenberg, the chief economist at Gluskin Sheff & Associates.
“The economy is on a moderate accelerating trend,” Mr. Rosenberg said. “We’re coming out of a flight to quality on emerging markets. This is a blip rather than a long-term trend. The yield decline is temporary.”
Will the US Economy Accelerate?
David Rosenberg thinks the economy is going to accelerate. If the economy does accelerate, the Fed will increase tapering, not reduce it.
Looking for another opinion?
Marc Faber Bullish on Treasuries and Gold
Taken from a Barron’s roundtable discussion, ZeroHedge reports Marc Faber Warns “Insiders Are Selling Like Crazy… Short US Stocks, Buy Treasuries Gold”.
Faber: What I recommend to clients and what I do with my own portfolio aren’t always the same. That said, my first recommendation is to short the Russell 2000. You can use the iShares Russell 2000 exchange-traded fund [IWM]. Small stocks have outperformed large stocks significantly in the past few years….
