Guggenheim's Minerd says the 10-year Treasury yield could be negative next year and opposes consensus view that rates are on 'uninterrupted trajectory higher'
Scott Minerdsaid the 10-year Treasurycould be negative in 2022 and rejected the consensus narrative rates are on an "uninterrupted trajectory higher."
Guggenheimglobal CIO said throughout history, every recession has been followed by a trough in interest rates.
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Guggenheim's Scott Minerd squashed the consensus narrative that rates are on an "uninterrupted trajectory higher" and said the 10-year Treasury yield could be negative in 2022.
In his latest investment outlook letter published Tuesday, the global chief investment officer said rising rates are not a foregone conclusion and explained that throughout history, every recession has been followed by a trough in interest rates several quarters later.
"Now, similar fears grip
He explained that the flood of cash from the stimulus has driven short rates lower, as money continues to flood into the private sector, stock and bond prices continue to rise.
"These levels would put downward pressure on 10-year Treasury rates, likely rendering the current yield unsustainable," said Minerd.In a chart, Guggenheim models the 10-year yield at -0.5% in January 2022, but that number is bounded by a two-standard deviation range of a high of 1 percent and a low of -2.0 percent.
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