The fear is that it looks like the 1950s, which was the start of 30 years or so of a bear market in bonds. “What today’s investors are worried about is, am I going to get caught in a bond bear market?” Robillard said. “What we’re seeing is people exchanging their wagers by the minute.”
Famed investor Stanley Druckenmiller in a couple of media appearances this month said he is shorting U.S. bonds, betting on a return of inflation and interest rates higher than we became used to in the 2010s.
“We shorted bonds the day the Fed cut 50 because we thought it was a mistake,” Druckenmiller told Bloomberg News last week, referring to cut in the Fed’s key rate of a half-percentage point.
Another billionaire investor, Paul Tudor Jones, told CNBC yesterday he believes a reckoning over the U.S. government’s borrowing is near and will push bond prices lower and rates higher. The U.S. government’s debt is now just under $36 trillion, and it takes in $5 trillion in revenue each year while spending nearly $7 trillion.
“We owe seven times what our tax take is this year,” Jones said. “Our deficit is $2 trillion, and it’s $2 trillion [per year] as far as the eye can see.”
Jones raised the specter of a “Minsky moment,” that turning point when markets collapse as investors recognize a situation as no longer sustainable. “I’m not going to own any fixed income,” he said, a reference to bonds.
