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Most bears on the the economy and the financial markets share the same outlooks.For example, many point to the U.S. government’s mounting debt load and argue that U.S. interest rates are bound to surge. In fact, we can think of 21 people who have argued that interest rates have nowhere to go but up.
But Gluskin Sheff’s David Rosenberg isn’t your average bear.
Rosenberg has long argued that Treasuries are in a monster bull market, which means rates are staying low.
This call even earned him a bottle of whiskey from Marc Faber, author of the Gloom Boom & Doom Report.
In his latest Breakfast With Dave note, he reiterates his call:
…So the era of the aftershock is what we are in and what will likely stay in for years to come, and that means that consumer habits, behaviour and patterns will undergo profound and enduring changes that will prove to be intensely disinflationary (drought-stricken soybeans, corn and wheat aside) and foster a prolonged period of ultra-low interest rates, bond yields and expected returns in the public capital markets for some time to come.
I remain steadfast of the view that the secular bull market in Treasuries does not come to a complete end until the long bond goes all the way back to its early 1940s low of 2%, so there is still a hefty 75 basis points of rally left in this monster. As an aside, Switzerland, Sweden and, of course, Japan, are already there. This will, in turn, render spread product as an attractive way to pick up a yield premium at the lows and continue to make dividend themes prevalent withing the broad equity market.
Here’s a look at the long bond aka the 30-year Treasury: