Bridgewater Growing Bearish on Bonds

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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Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.