Surge In Bond Yields Says It’s Time To Buy Bonds

The surge in bond yields suggests that we are nearing the ideal entry point to buy longer-duration bonds for capital appreciation and portfolio protection.

Such isn’t the first time we have made this call.

In December 2018, we wrote why Jeff Gundlach was likely incorrect about bond yields topping 6%. Here is the conclusion to that article.

“Currently, interest rates are at a level that has historically led to some sort of event. Whether it was economic, financial, or both, there is no real precedent that suggests rates could rise another 3% from here without severe ramifications. Of course, as the market declines, the demand for “safety” would ultimately push rates lower.

At some point, the Federal Reserve is going to step back in and reverse their policy back to “Quantitative Easing” and lowering Fed Funds back to the zero bound.

When that occurs, rates will not only go to 1.5%, but closer to Zero, and maybe even negative.“

Surge In Bond Yields, Surge In Bond Yields Says It’s Time To Buy Bonds

Of course, just 6-months later, the Fed dropped rates back to the zero bound. Then in September 2019, the Fed began bailing out hedge funds. That continued until March 2020, when the Fed implemented the largest ever QE and monetary bailout.