We’ve been waiting patiently (or perhaps not so patiently) for the 30+ year bull market in bonds to come to an end and a mega down trend to emerge. What can we say – when we think about the tailwind that higher interest rates can provide to managed futures programs and the prospect of a nice sustained downward trend in bond prices… Who can blame us for getting excited?
But we (and the rest of the managed futures world) have had to wait, suffer the disappointment of false breakouts lower, and bide our time until the real downtrend emerges. But now it looks like the anticipation has swept up one of the biggest players in industry – Bridgewater’s Ray Dalio. Via CNBC:
Rising interest rates in 2013 will likely push down prices in almost every financial asset in the world according to Ray Dalio, the founder and chief investment officer of the world’s largest hedge fund, Bridgewater Associates…
“The biggest opportunity, and I don’t think it’s an imminent opportunity, will be shorting the bond market,” Dalio said.
Dalio’s remaining fairly ambiguous here. He sees rates going higher next year, but doesn’t think shorting the bond market is an “imminent” opportunity? Rising interest rates would lead to falling bond prices by definition… So just what does “not imminent” mean? Next month? Six months from now? It’s not clear.
Of course, you don’t get to be the head of the world’s biggest hedge fund by being wrong all the time. On the other hand, calls for a bear market for bonds in the US has been, on average, a losing game for the last few decades. But one day those calls are going to prove true. A stopped clock is right twice a day (Or for a better comparison, those predicting the end of the world are going to be right eventually… after many, many times being wrong). Now that Dalio’s on board, is the time for a bear market in bonds finally upon us?
We’ll try not to get our hopes up, but we can’t make any promises.
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