Bond-Market Forecasters Are Looking Like Idiots

Interest rates have been tumbling for three decades in the US. Early Wednesday, the 10-year Treasury yield tumbled to as low as 1.78% from 1.90%.

In recent years, most economists and interest forecasters have becoming increasingly convinced that rates are due to rally.

However, they have been proved wrong as rates have continued to trend lower.

Earlier Wednesday, Ed Yardeni highlighted nine reasons why US rates could fall lower: “Bond shortage, Portfolio rebalancing, Bond fund inflows, Fed still buying, Yields plunging in Europe, Inflation remains subdued, Global growth is slow, Ultra-easy monetary policy, and Safe Havens. These factors continue to drive yields lower. They also make stocks, especially dividend-yielding ones, look more attractive.”

DoubleLine Funds’ Jeffrey Gundlach and HSBC’s Steven Major have been among the minority that has been on the right side of this trade. Both expect rates to keep falling in 2015.

According to economists surveyed by Bloomberg, the yield on the 10-year note is expected to end 2015 at 3.01%. Jeffrey Gundlach highlighted those calls in his latest presentation. See below.

Unless things turn around, that call is going to be a disaster.

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