The 10-year Treasury bond might go to 1% and the 30-Year Treasury could go to 2 percent. So says Gary Shilling who was interviewed on Bloomberg T.V. this week. This is a matter of a safe haven and a developing global recession, according to Shilling.
Shilling thinks the U. S. is already in a recession with Europe and China in for a hard landing. Deflation is starting to pop out all over with declining oil prices and commodity prices in general said Shilling. These are the factors that could drive down bond prices, according to Shilling.
Shilling stated he has never been in Treasuries for their yield, but is looking for price appreciation. He pointed out that even at relatively low yields a minor drop in yields gives you big appreciation.
The interview continued with a discussion of the relative safety of Treasury bonds, the risks to Shilling’s outlook for falling yields, a long conversation regarding housing market dynamics, his expectation for home prices (another 20% drop from here), and a prediction for stock prices (S&P 500 at 800).