Dalio: The US economy is in a relatively good balance, and I do not believe the Federal Reserve will significantly cut interest rates
Bridgewater Associates founder Dalio said that the market's expectations for a significant rate cut by the Federal Reserve seem to be too high. US bonds are not a very good investment. Compared to the bond market, the stock market is relatively more attractive, but US stocks are highly concentrated in increasingly expensive technology and artificial intelligence-related stocks
On Tuesday, billionaire and Bridgewater Associates founder Dalio stated that after the Federal Reserve cut the federal funds rate by half a percentage point, he expects that there will not be a "significant rate cut" in the future. The market's expectation of a significant rate cut by the Federal Reserve seems to be too high. The Federal Reserve made its first rate cut in four years last month, but the strong September non-farm payroll report provided policymakers with room to slow down their actions in the future.
Dalio stated at the Greenwich Economic Forum that the U.S. economy is currently in a relatively good balance.
Dalio pointed out that the U.S. is in a "political year," with the presidential election scheduled for November. He believes that the upside risk is greater than the downside risk.
Dalio expressed some concerns about the U.S. Treasury market. He said that the supply and demand situation in the U.S. Treasury market is unusual. U.S. Treasuries account for a large proportion of institutional investors' portfolios, and he feels that the weighting is too high. Dalio also mentioned, "We are in a balance, and the U.S. debt situation is like a time bomb." In addition, geopolitical uncertainty is also a problem for the U.S. Treasury market, as foreign investors are worried about holding U.S. debt.
Dalio stated that given the recent volatility in the U.S. Treasury market, bonds are a high-risk investment. "U.S. Treasuries are not a very good investment. We face interest rate risk in the bond market. Compared to the bond market, the stock market is relatively attractive, but U.S. stocks are highly concentrated in increasingly expensive technology and artificial intelligence-related stocks."
Dalio also commented on the policies of the two U.S. presidential candidates. Dalio is more optimistic about Trump's economic policies, stating that his approach to lowering corporate taxes is more in line with capitalist tradition