Bonds face biggest bear market in almost 40 years: Dalio

New York: Billionaire hedgefund manager Ray Dalio said that the bond market has slipped into a bear phase and warned that a rise in yields could spark the biggest crisis for fixed-income investors in almost 40 years. “A 1 per cent rise in bond yields will produce the largest bear market in bonds that we have seen since 1980 to 1981,” said Bridgewater Associates founder Dalio. We’re in a bear market, he said.

A Treasury selloff extended following Dalio’s comments, pushing 10-year yields through 2.65 per cent, near the highest since mid-2014. Dalio predicted that the Federal Reserve will tighten monetary policy faster than they have signaled, and said that economic growth is in the late stage of the cycle but could continue to improve for another two years. The current economic environment is good for stocks but bad for bond investors, said Dalio, who’s chairman of Bridgewater, the world’s biggest hedge fund.