(Bloomberg) -- The climb in Treasury yields that’s threatening to inflict trillions of dollars in losses on fixed-income investors looks like a buying opportunity for one long-time observer of financial markets.
“I haven’t seen this sort of listing of the boat in a market in a very, very long time,” says former “Gartman Letter” publisher Dennis Gartman, referring to recent bond-market bearishness. “So a contrarian has to say, ‘I should look at being bullish’” on bonds.
In an interview Monday with Bloomberg Radio, Gartman, who now chairs the endowment investment committee at the University of Akron in Ohio, cited a trading pattern from Friday as key to his thinking.
“Everybody, and I mean everybody, is bearish the bond market and suddenly you had a reversal to the upside in the long bond,” he said.
The 30-year Treasury rallied Friday, paring last week’s decline. The maturity’s yield posted its biggest daily decline since July. It’s trading at about 2.07% Monday, up from 1.8% a month ago. The benchmark 10-year yield, at about 1.62%, was around 1.3% a month ago.
Amid elevated inflationary pressures, fixed-income investors are bringing forward bets that the Federal Reserve will begin to raise interest rates next year, after tapering asset purchases by the end of 2021.
Gartman has been in the camp that sees inflation as persistent, so his bet on lower Treasury yields, he suggests, will be temporary.
“Five years from now, the 10-year yield would be about 4%,” he says. “But for the next month or two, having seen the 10-year yield go from a little under 1% to 1.65%, can we get back to 1.35%? I think we can do that without too much difficulty.”
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