US 10-year yields
US 10-year yields reversed today after an earlier rise. This turning point weighs on the US dollar and boosts stocks.
Bill Gross, co-founder of PIMCO, doesn’t believe it will last. The 80-year-old former Bond King today released a rare investment outlook in which he cautions against betting on falling Treasury yields, largely driven by higher U.S. deficits important.
“Those who argue for lower rates must counter the inexorable rise in Treasury supply and the likely Sisyphean decline in bond prices,” Gross writes. “Look for yields of 5% plus 10 years over the next 12 months, not 4.0%.”
He points out that there is almost $30 trillion in public debt issued by the federal government and it is growing at 10% per year.
“The U.S. economy needs budget deficits and net Treasury debt increases of $1-2 trillion or more per year for the economy to grow,” he writes.
What do you think? Which comes first 4% 10 year yields or 5%?
The gold market is certainly giving warning signs about the US dollar.
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