Hedge fund manager Bob Prince (Bob Prince) warned that the recent sell-off in the US government bond market may accelerate, which may “threat high-liquid assets” such as cryptocurrencies and blank check companies. Prince is the co-chief information officer of Bridgewater Associates. He linked the imminent downturn in the $21 trillion U.S. Treasury market with economic growth and increased inflationary pressures.
Prince believes that these two factors may “promote the Fed to consider withdrawing its stimulus measures.” Nevertheless, as a report explained, Fed policymakers are “avoiding the sell-off of US Treasury bonds, which is beneficial to the recovery of the US economy.” Healthy response.”
However, Prince asserted that “this surge in cryptocurrencies such as Bitcoin is a manifestation of the kind of environment created by the loose monetary policy of the U.S. Central Bank and the stimulus measures provided by the U.S. Congress.”
At the same time, the report said that inflation expectations in the United States this year have risen, suppressing the price of government bonds and increasing their yields. In turn, this has “hit fast-growing technology companies such as Netflix, Amazon, and Tesla, because their high valuations are supported by low interest rates.”
At the same time, the same report also explained that foreign investors are one of the largest buyers of Treasury bonds in the United States after the Federal Reserve. Due to increasing losses, the demand for US sovereign debt has weakened.
The yield on 10-year US Treasury bonds has recently climbed from 0.9% at the end of last year to over 1.6%. According to Ice Data Services, “This is the worst quarter for U.S. Treasury investors in more than four years.”
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