Billionaire investor Dario, founder of Bridgewater Fund, the world's largest hedge fund, predicted at a forum on Tuesday that the Federal Reserve will not "significantly cut interest rates" again. He also said that in view of the recent fluctuations in the treasury bond market, bonds are a high-risk investment.
The US economy is currently in a relatively good state of balance, "Dalio said at the Greenwich Economic Forum on Tuesday. He said that investors' bets on the Fed's rapid interest rate cuts were somewhat hasty.
Last month, the Federal Reserve cut interest rates for the first time in four years, lowering the federal funds rate by 50 basis points. But the strong September non farm payroll report released last Friday has opened up space for policymakers to slow down their pace of action.
After the release of the non farm payroll report, the expectation of the Federal Reserve cutting interest rates by 25 basis points at its next policy meeting has significantly increased. According to the Federal Reserve Watch tool of the Chicago Mercantile Exchange, traders currently estimate a probability of approximately 86.7% for a 25 basis point rate cut in November, 13.3% for no rate cut, and zero for a 50 basis point rate cut.
Worried about the bond market
Dario also expressed concern about the US bond market and pointed out that the current "bond market is facing interest rate risk."
Dario pointed out that the supply and demand of the US treasury bond bond market is in an unusual state. He said that US treasury bond bonds account for a high proportion of the investment portfolio of institutional investors and central banks, which has a sense of over matching.
Dario also pointed out that geopolitical uncertainty is also a problem facing the US treasury bond market. "Foreign countries are worried about holding US treasury bond bonds because they may be subject to sanctions," he said.
The US treasury bond bond market has been volatile this year, with the yield of two-year US treasury bond fluctuating between 3.5% and more than 5%.
Talking about the US presidential election
In this interview involving multiple topics, Dario also talked about the US presidential election and its potential impact on the market. He is optimistic about former President Trump's economic policies, calling his proposal to lower corporate tax rates "more typical of capitalism".
He put forward a very good point on the ability to increase tariffs, "Dario said, adding that he calculated that Trump's tariff proposal would raise approximately $800 billion annually.
However, he also stated that Trump's tariffs will lead to inflation.