JIM O’NEILL: We Could See A Bond Crash
June 14, 2013
As the market speculates on when the Fed will begin to slow its quantitative easing program, former Goldman Sachs Asset Management chairman Jim O’Neill isn’t alone in believing a taper would mean turbulence for financial markets.
But for O’Neill, it would also “not be a stretch” to see 5% yields on the 10-year Treasury, reports Bloomberg.
Given the 10-year’s current 2.11% yield, that would imply a big sell-off in the bond market.
O’Neill talked about that — and his prediction for a bond crash — in his Bloomberg View column earlier this week:
A return to normality eventually implies a benchmark 10-year Treasury yield of 4 percent or more. It won’t happen all at once, but that’s where we’re heading. With yields at roughly 2.2 percent, there’s a long way to go. This transition will mark a recovery of the equity culture and the cooling of investors’ protracted love affair with bonds.