Some of the big Wall Street shops are looking for the sell-off in the Treasury market to continue after the Federal Reserve’s monetary policy statement and press conference today.
Société Générale interest rate strategists, for example, suggest that Bernanke will actively help it along today.
Jeff Gundlach, one of the biggest names in bond investing today, thinks we’re in for just the opposite: he predicts U.S. Treasuries will begin to rally.
In fact, he says long-dated Treasury notes are the only place investors will be able to make any money in the coming weeks and months.
In an interview with CNBC, Gundlach said:
When we were talking at my strategy team about a month ago, we were saying, “What should we buy? What should we invest in?”
And I made the comment: “I can’t find anything that I think is going to be a money-maker.”
And when we look around the world, that’s been the case. There’s really nobody making any money in anything in the past month.
Stocks are down – not much in the U.S. – but they’re down hard in a lot of emerging markets and in Japan. Gold looks like it’s going to break down to a new low. Bonds are going sideways.
No one’s making any money anywhere, and I think that’s because people think the conviction of central banks to continue the amount of monetary stimulus through bond purchases is less.
And that’s where we are right now. That’s what’s going to happen today again…
I think, actually, rates are going to start falling. I think the place – the one place – that you’re likely to make money in the next several weeks, maybe couple of months is actually, believe it or not, the most hated asset class on the planet: long-term U.S. government bonds.
That’s what I think is going to be the most successful investment, and what I’m really looking at to reach that conclusion is the fact that there is no inflation anywhere. There’s no sign of inflation.
Gundlach believes this all comes together to form “a bond market rally that is going to start fairly quickly.”
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