Treasury Yields Predictions

[30:16] the downtrend in yields that persisted from for 40 years from 1982 to 2022 is over. It is dead. It is over... we are no longer in a world where yields are steadily on the decline... these distinct uptrends remain and it just suggests that that the this world of a higher cost of capital is going to persist.

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[29:13] Short-term the yields are overbought and you can see that in the 10 year, the 30-year, 2-year even. And so we wouldn't be surprised if you saw some consolidation in yields.

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[23:53] RAA I still believe believes that bond yields are much more likely to trend downward over the next couple years.

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[23:04] when there's a lot of debt there is down the line um a devaluation of money. Debt is money and money is debt... when you're holding that as a dead asset, I don't think it's a good asset. in in this confluence right now of circumstances

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[28:48] I think infl leveraged inflation index bonds is an interesting mix because the returns of cash will be relatively low the real yield on u inflation index bonds is now about 3% pretty good real yield and that I think inflation pressures carries it forward.

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[1:39] where they're headed because they're going much higher. This is not the end of this move. Uh we're probably closer to the beginning.

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[14:05] But they're going to keep on going down. We're we're nowhere near the bottom of the bond market. So, the losses are just going to compound.

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[2:21] I just finished saying a couple days ago, it looks like we've had a short-term measured move on the on the Treasury yield that it's peaking out. It's most likely going to start a probably a multi-week pullback.

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[1:32] in the last couple of weeks for the first time in god knows how long I can remember I have started to add some exposure in shorter duration um treasuries so two-year notes specifically

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[4:21] I think that that that that ultimately bond yields will come down.

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[17:33] bond yields are going up for all the reasons I mentioned and the fact that the Fed is stepping away from being the enabler, the great enabler of this government and its issuance of debt.

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[14:04] the Pavlovian response into the bond market is going to be muted at best... I do not think the next time we have a recession I know there'll be a Pavlovian response to go into the long end of the yield curve once the recession becomes manifest but I don't think it lasts very long.

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[18:30] I don't think that this trend is over anytime soon uh because we had 40 42 years of uh falling yields and now we are in the six years of rising yields. So even if it would be just a retracement on that 40 year uh downtrend uh uh this could easily take uh 10 years maybe 12 to 15 years even. So, I think we're still right in there, and I think we're going to see double digit uh yields at some point down the road.

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[33:38] 5% on yields now is actually very normal. And that was one of the things we argued about in in the podcast is uh that history of 2010 to 2020 might never be repeated again unless you were to get microscopically low inflation.

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[31:27] at the very least, even if they don't spike under this massive trillions and trillions of money printing, they will not fall in the same fashion as it did before. that that that much I can I'm very confident in.

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[17:30] I believe that you'll see a continuation of the circumstance that you see now where the Fed is able to maintain control over the 2-year because they're such predominant players in the 2-year, but they lose control of the rate on the 10-year and the 20-year and the 30-year.

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[19:03] if long-term interest rates are the three components, we've already eliminated inflation. The second part is growth and which we just talked about with a flat yield curve. The flat yield curve is an indication the market is not looking at a reflationary environment... that leaves us just the expected path of short-term interest rates... It's not that rates can't go up, it's why rates are going up. And therefore, does that tell us that there's maybe a ceiling on how far rates can go

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[6:33] I've been thinking four to 5% is uh where we'll be for a while. Uh, now we're right smack dab on top of that 5% level. And the sus suspense is killing me. Uh, you know, I I hope 5% holds, but uh it's it certainly might not.

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[31:07] Interest rates are still moving higher. Uh W uh Kevin Worsh sees himself as a Paul Vulker, which I think is a good sign.

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[29:38] we have this sideways period that interest rates are supposed to be in and then we late at the toward the end of this year uh we get the really steep advance in in interest rates to match the steep advance in gold prices 20 months before.

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[35:11] gold as you may recall topped in January of 2026. So if you count forward 20 months uh from that you get about August of 2028. Um should be the the peak for interest rates

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[23:33] when it bust usually interest rates go way high.

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[38:46] I don't know. I I think 525 530. I don't think it's going to be like 6% or anything like that by the way.

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[25:02] So if it took 40 years from the for the yields to get from 16% to 0%, it could probably take 10 years to go from 0% back up to 16%. And we're already 6 years into it. So, there may not be that many more. We the bottom could drop out of the bond market. We could have a crash in the bond market. Yields could just go through the roof.

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[23:54] This is where I tilt over to T-bonds at right now 5.34%. I've been wrong in that for a while... And to me, that's the next big trade.

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[28:15] we've called for 6% on first world long-end nations, six nations, 6% within 6 months of this year ending. We said in the end of 2025, they're all well ahead of schedule. Not just the 30 years, the 10 years are even, some of the 10 years might even make it.

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[15:08] you called staying out of treasury bonds one of the best calls of your career. You said those losses will continue. Why is that?

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[4:23] I think unfortunately, the Treasury is going to be forced to address this through a combination of issuance and market involvement and in factors like buying back those low-priced bonds because the current participants are ignoring it.

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[0:43:42] The fact is simply the tailor rule according to which interest rates would be at the neutral level on the 10 years it would be above 6%. According to the Taylor rule at the present time but the bond is 4.7% so interest rates are relatively low in comparison to the rate of inflation we have in the system.

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[6:14] it looks with, you know, hedge funds being kind of the marginal material buyer, uh, those rates are going to go up at the long end.

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[5:50] we have um quite a bit of the fund is in two-year notes right now. Now, that's just a bet on the Fed, but that won't be there a year from now.

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[5:23] my biggest risks over the next few months are that yields on the long end still are likely going to rise and also that crude oil also can probably rise.

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[16:26] yields likely cannot get too far above 475 on the 10-year uh without causing a very noticeable trigger where, you know, the Treasury will come in and start to buy massive amounts of uh different kinds of securities

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[12:36] I'm bearish on US government bonds, but I know that they'll come in with all the fire hoses they've got to save that beast.

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[5:13] I think there's a real opportunity at the front end of the yield curve uh which is still priced uh you know at least for one more hike. I think that's going to come out. The two-year note is actually a very good place to be. two years and three years uh in that part of the curve.

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[11:48] He he does not. I think it goes higher.

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[5:39] The trend in interest rates is going to be higher. And uh we're going to have um uh generally poor economic performance uh in which the standard of living will stagnate and uh basically a complete reversal of what we saw over the previous three decades from let's say 1990 to 2020.

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[37:27] the real rate is going to rise. And the reason it's going to rise, Adam, is because of what we just talked about. that we have this imbalance between the demands for physical capital and the supply of saving. So, it's going to drive the real rate higher. Inflation is going to go higher

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[40:08] the last element which has not been a problem but is the is the risk premium. And and the thing that that I believe is going to change the risk premium is the fact that the interest expense is making it almost impossible from a political standpoint to address the deficit which means that the deficit direction is worse and worse.

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[11:01] I think it's going to be more the two-year in can come down because that's directly affected. There's an ETF. It's a little bit aggressive. It's a TUA is the ETF and it actually tries to invest in two-year treasuries using futures to create longer duration because otherwise, you know, you buy and sell two-year Treasury ETFs, they just don't move very much. So, if you're aggressive on this, like own some Tua and I will probably add to it. Um, because I like that exposure to two-year

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[28:09] underlying GDP growth in the US nominal GDP so that's with inflation is running at something like 7 to 8% and that is incompatible with bond yields currently at what 4.7 at the 10-year level. >> So do you think so bond yields headed higher then? >> There there seems to be no question.

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[12:54] I believe we're in a long-term uh trend higher for Treasury yields. And I believe we'll see the 10-year above 5%. That was the high in October of 23.

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[28:05] there's there's no doubt the chart of of the 5year yield the 10year the 30-year they're all pointing to higher pricing and and you and I have talked about this for many many months. I'm like the chart is the charts are actually pointing to for the for the 10 year and the 30-year 8%.

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[31:07] I I think the bond market is going to call call a tune. And and one thing we know, we we know the stock market's in a bubble... higher interest rates you usually are associated with bubbles popping.

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[17:19] I don't think bond yields are rising. I got it. I got them at four to 5% for as far as the I can see. I think we're going to kind of going to stay at normal.

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[0:00] the bottom line is the higher for longer interest rate environment I think is very much here to stay especially if you're bullish on AI and this whole capex boom because that's going to feed this crowding out phenomenon that's putting upward pressure on Treasury yields which happens to be the benchmark against which everybody has tied. So you're talking about you know higher for longer for everybody.

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[31:29] just as you know the fall of the Berlin wall and the onset of globalization thereafter pushed rates steadily lower from 1980 till basically just a few years ago. So will delization I think beget the reverse where rates will slowly just ever so you know each year move higher and higher

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[44:55] they'll keep going up. You you don't want to be long you long long bonds, those interest rate those interest rates will go up and and that means what? If the interest rates go up, the price goes down.

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[24:35] I I think bond yields are going to move higher. And and and if the only way I think you get bond yields moving lower is an a lower equity market to force people into bonds. And we're not getting that at this point.

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[0:00] there's a limit to how high treasury yields can go if the US is running a 6 to 7% deficit... I just see it as really there's a cap on yields. And while there's not a firm cap yet, while we haven't seen actual yield curve control, there's an implicit target

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[31:37] The main thing I think is mispriced is long bonds at 5.2%. I think by the end of the year they'll be much lower.

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[10:28] I think bond yields are going up. I think bond like where they go to five, five and a half, six, I don't know, but they're going up. And when they go up, that's not exactly going to be good for the stock market

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[19:39] I've been bullish. I've been bearish consistently on bonds for two, three years, and I'm not changing my tune.

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[11:50] We think that since 2020 we entered a different structural period for long-term bond yields where we think the Treasury yield on the 10 or 30 years going to be moving higher which is poor for bond prices and that doesn't mean you may not have a six or 12-month period where owning a 20 or 30-year Treasury bond does well, but we think on average when you're looking out five years that's not a great place to be because of this increase in uncertainty and inflation and interest rates.

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[27:07] I think the market starts betting that the Fed's at least going to go on the sidelines, which would take the 2-year Treasury down. So, I would say the shorter shorter tenure 10 ten years from here because they've blown out so much would be a good place to be.

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[28:21] Gold is not going to be the safe haven. Uh, the Treasury bonds of the US is going to be the safe haven as they were in 2008.

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[28:56] bond yields, I'm telling you, I'm expecting a Treasury bond yield and we've already seen 0.4% so many years ago in the last downturn, 2008-2009. We're going to see Treasury bond yields go down to zero or lower.

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[23:24] you're talking about a a 10-year nominal Treasury yield that is a a fair value of about, you know, five and a quarter, somewhere about 5.9 somewhere between five and five and 3/4 to 5.9%... you're talking about a a bond market that could easily reprice to somewhere well north of 5%.

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[35:08] They are forecasting that bond yields have peaked with the inflation number that peak that that came out really hot last month. So, there's they expect that inflation's going to cool off as we go through the rest of year. That's going to bring down bond yields, which is going to be a positive for the underlying economy

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[4:32] oil prices have come down which should stabilize inflation more. Uh so you should probably see yields come down.

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[36:23] I don't think the Fed is in control anymore. And I don't think you can artificially suppress interest rates in perpetuity. And the bond yields continue to rise.

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[37:21] Um that's not my expectation. I I think yields have peaked. I think they will come down. I think they'll come down most at the front end of the yield curve. So it'll steepen cuz I think that those rate hike expectations are going to come out. I think in the US we'll revert back to those two rate cut expectations.

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[21:17] I think rates will will stay up, but I guess as with all things, there's there's 10 or 20 or 30 different factors affecting something

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[22:15] my prediction is by the end of the year, everything will be down following Bitcoin, following precious metals, bond yields lower

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[20:25] We're going to punch through the yield highs. We're going to go through the price lows. And when you do that, the Fed, it's not one of their mandates. You know, it doesn't say we we're here to defend the government debt. Okay? But that's that's their mandate.

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[31:04] a lot of people think we will and, you know, could have big losses because you you look at these price charts for these major bond markets around the world, they look sick... we're going from five to six on the long-term Treasury

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[32:49] Y, yeah, yields are going up. Yields are going up anyway because the interest rate is a function of the inflation rate... And I think that I think they'll remain elevated. And that's why you've got the 10year at uh you know, almost 4 and a.5%.

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[2:52] I mean I think that it will actually hit the markets when we see bond yields run up again um particularly at the long end. And um they're breaking out. I mean they're all some of them have already broken out. I mean Germany's for example um France's Japan's they're already breaking out on the upside. The other G7s will follow.

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[2:10] I think yields are going a lot higher on the longer end in particular. And eventually the stock market is going to notice that and you're going to start to see some weakness there.

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[20:38] we're pretty much poised on a precipice of interest rates on long-term government debt breaking out to the upside.

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[25:16] that's when you will have a temporary collapse in long bond yields, governments and central banks throwing everything into the kitty so that you get a resurgence of inflation. Take us into the real collapse some somewhere between 2030 and 2032.

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[13:38] I think we'll get persistently higher yields because as we have seen central banks do cut rates and they have cut rates despite for example in the UK you saw uh inflation was rising and still the bank of England reduce rates but you know what happens is that the bank of England cuts rates and in very little time bond yields are back have completely offset that rate cut

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[12:00] I expect we'll probably see more of those pressures, especially if wars actually endeavors to shrink the balance sheet.

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[25:09] I do think rates will continue to move higher. I don't think I'm at the point where I'm going to say that we're at imminent risk of breaking something. That could be later, but not right now.

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[6:11] We spoke last time about the possibility of the yields going to 5% or higher. U, you asked me, do I have more conviction in that view now? Yes, I certainly do.

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[15:31] I think honestly in the near term, yields probably are going to start to come back in. I don't think the government's going to let things get too far out of control without the Fed trying to intervene.

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[21:03] we're suggesting that u investors should um should be very cautious and and and really take a defensive posture and that means being long um treasury bonds being out of stocks or possibly short major stock indices.

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[7:47] I think bonds are mispriced. I think yields are heading up.

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[32:04] based on this chart pattern it is pointing to like roughly like you know 8% % interest rates.

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[14:17] I think duration is the actually investment opportunity. you know, as much as people think yields are going to keep on rising, quite the opposite.

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[22:32] I still think there'll be enough of an inflation shock up ahead here and concerns that it's it's spreading that we will see four and 3/4%. But I would view that as a a tremendous buying opportunity.

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[8:47] even if we go into a recession, I think uh long-term interest rates on Treasury bonds will go higher, not lower, and that will break the pattern of the f the first 40 years of my career. And I think that's what's going to happen.

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[14:08] I'm projecting that TLT could double or a little more in this crisis when everything else including now gold and silver uh go down

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[31:11] they will go that or lower. They could go negative. So, if you're holding that 10-year Treasury and it goes from 4 and a half today down to zero, you know how much that bond's going to be worth? Double.

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[1:26] I think it's about time we're going to get a pretty significant reversion next year in stock market bond yields to go lower

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[39:08] the high in 2023 on the tenure was a 5%. I think we're going to go about 5%.

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[13:26] there's all sorts of these forces that are moving in an inflationary direction and that of course is going to be another significant force um um pushing bond yields higher

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[0:07] Gold soaring like this is telling you that the dollar is going to go down, that bonds are going to go down.

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[35:01] And I'm looking for the low 3% by early 2026.

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[17:30] interest rates are coming down in America and therefore bonds are going to bond yields are going to go down

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[5:52] Gold is the new trusted collateral... the new collateral isn't sovereign bonds in general or 10-year US treasuries in particular, the new collateral is gold

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