David Rosenberg Says Bonds Are "Radically Oversold"
Rosenberg believes the recent rally in the benchmark 10-year Treasury Note isn't going to continue and that the yield will "peel back to 1%." The 10-year yield ended the week at 1.41 percent and is up 55 percent year-to-date.
Treasury yields move inversely to prices. Investors have been selling stocks as inflation expectations have increased in search of better real returns.
“The problem I have with that view is that all this stimulus is temporary in nature and rolls off next year when we face the proverbial fiscal cliff,” Rosenberg said.
However, Rosenberg could see a run-up to 2 percent. “That would be on a huge technical overshoot,” he said. “A 2% move in the 10-year note I’ll tell you would be the same as 3%-plus in late 2018. It’s something that you want to buy.”
Rosenberg doesn't believe that the recent tech sell-off is a direct result of rising rates. “The reality is that most of them actually peaked out and started rolling over several months ago just under the weight of their own overvalued excess,” said Rosenberg.
“We’re not going to be hearing the bond bears talking about inflation much longer,” Rosenberg said.