Bridgewater Associates: The Fed will not "significantly cut interest rates", US bonds are not a good investment
Billionaire investor Dalio expects the Federal Reserve to not significantly cut interest rates, believing that the US economy is in good shape and that the volatility in the US bond market increases the risk of bond investments. He points out that US Treasury bonds are not a good investment, and that geopolitical uncertainties have increased the risks of holding bonds. In addition, Dalio is optimistic about Trump's economic policies, believing that his tariff proposal could raise $800 billion annually, but it could also lead to inflation
Billionaire investor Ray Dalio said he expects the Federal Reserve not to "significantly cut interest rates" because the U.S. economy is "in a relatively good balance" and given the recent volatility in the U.S. Treasury market, bonds are a risky investment.
The founder of Bridgewater Associates stated at the Greenwich Economic Forum on Tuesday: "U.S. Treasuries are not a very good investment. We face interest rate risks in the bond market."
Dalio believes that investors betting on rapid rate cuts are being overly optimistic. Last month, the Fed cut rates for the first time in four years, lowering the federal funds rate by 50 basis points. However, strong job reports in September provide policymakers with room to slow down in the future.
The U.S. Treasury market has been volatile this year, with the 2-year Treasury yield fluctuating between 3.5% and over 5%.
Dalio mentioned that U.S. Treasuries make up a large portion of institutional investors' and central banks' portfolios, with a perceived overweight. He added that geopolitical uncertainties are also a concern in the bond market.
He said, "Foreigners are worried about holding bonds" as they could face sanctions.
In this extensive interview, Dalio discussed the U.S. presidential election and its potential impact on the market. The investor is optimistic about former President Trump's economic policies, calling his proposal to lower corporate tax rates "more classic capitalism."
Dalio stated, "He has a very good point on the ability to raise tariffs." He estimated that Trump's tariff proposal could raise about $800 billion annually. He also mentioned that such tariffs could lead to inflation