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U.S. Treasuries Defy Bearish Calls

Though bearish bond managers’ predictions about yield — including from PIMCO’s Bill Gross and BlackRock’s Rick Rieder— have not come to fruition, they still warn about the end of a market bubble that many claim is sustained by central banks. Since 2009, many have bet that yields would rise when interest rates rose. Each year began with bond managers selling off government bonds to move into equities, anticipating an economic downturn — only to return to buying government securities.

But betting that interest rates will rise can be risky, warns DoubleLine’s Jeff Grundlach. Even bearish Bill Gross, whose bond fund has beat the index the past five years, advises investors to continue in the market, which he characterizes as a “bubble.” Believing the economy will grow, Goldman Sachs is warning their clients about going too long on bonds. For many TDFs, long term bonds represent a serious threat if yields do rise.

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