US 10-year yields
US 10-year yields have reversed lower today after an earlier climb. That turn is weighing on the US dollar and boosting stocks.
PIMCO co-founder Bill Gross doesn’t believe it will last. The 80-year-old former Bond King released a rare investment outlook today where he warns against betting on falling Treasury yields, in large part due to larger US deficits.
“Those that argue for lower rates have to counter the inexorable upward climb in Treasury supply and the likely Sisyphean decline in bond prices,” Gross writes. “Look for 5% plus 10-year yields over the next 12 months — not 4.0%.”
He highlights that there is nearly $30 trillion in outstanding public debt issued by the Federal government and it’s growing at 10% per year.
“The U.S. economy requires fiscal deficits and net increases in Treasury debt of 1-2 trillion or more annually in order for the economy to grow,” he writes.
What do you think? What comes first 4% 10-year yields or 5%?
The gold market is certainly flashing some warning signs about the US dollar.