Guy Haselmann: "30-year treasury yield will drop below 3% before year end"

October 5, 2014

2 minute read

Note prepared by Guy Haselmann, Director, Capital Markets Strategy, Scotiabank GBM

I am back from visiting clients. Today, I have decided to send out only the last part of today’s note. You will find it below. The first part is, let’s say, unnecessary and too edgy.

· For investors, Fed policy that is on the verge of pivoting is like a brain-teaser puzzle, because investors no longer know if good economic news is good news or not for prices of risk assets. During QE, good economic news still meant a printing Fed so it was good for financial assets, but now it may mean a more hawkish Fed or a sooner hike in rates.

· Either way, the strike price of the Fed’s implicit put is being pushed from at-the-money to one far out-of-money. This dramatically and unfavorably changes the risk reward distribution of risk assets. If, as I suspect, the Fed is determined to begin moving (away) from zero rates (due to risks to financial stability), then the Fed’s first hike can come in March, and it doesn’t matter if inflation remains here, or whether growth is 2%, 3% or 4%. The dollar is showing signs of such.

· I remain a bond bull. I am pulling forward my prediction that the 30-year Treasury yield will drop below 3% before year end to prior to Thanksgiving. I may even be right for the wrong reasons, but so far so good.

· “May the odds be ever in your favor!” – Effie Trinket

Guy Haselmann | Director, Capital Markets Strategy
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Scotiabank | Global Banking and Markets
250 Vesey Street | New York, NY 10281
T-212.225.6686 | C-917-325-5816
guy.haselmann[at]scotiabank.com

Scotiabank is a business name used by The Bank of Nova Scotia

Author

Guy Haselmann

Mr. Haselmann has 30 years of diverse capital markets experience, including 14 years building and managing assets at 2 well-known macro hedge funds. During his career, Mr. Haselmann traded numerous capital market securities. He has developed risk management strategies and trading procedure guidelines.

Previously, Mr Haselmann was Director of Capital Markets strategy, at Scotiabank GBM, where he incorporated a global macro approach. Mr. Haselmann has been published in academic journals, newspapers, and has written countless strategy pieces. He has appeared on various TV and Radio programs, such as BNN Bloomberg and Bloomberg. Mr. Haselmann is a guest lecturer at several universities, including his alma mater the University of Delaware Lerner College of Business and Economics. He is a frequent panelist at industry conferences.

In addition, Mr. Haselmann was a gubernatorial appointee to the NJ State Investment Council and was appointed by the chair to the Investment Policy, Executive, and Nomination subcommittees. Mr. Haselmann is President, and a member of the Board of Governors, of the NY Money Marketeers.

Specialties: Analyzing global macroeconomic policies and capital market interconnections to strengthen investment and strategic decision-making in financial markets. Providing portfolio construction solutions to enhance risk-adjusted returns. Macro trading and strategy. Risk management. Alternatives advisory services. Hedge funds and other alternative investments. Funds of Hedge Funds. Analysis for optimizing position sizes. Capital market products. Options.