Hoisington Sees Treasuries Escaping ‘Inflationary Psychosis’
- ‘Disinflation is more likely than accelerating inflation’
- Rode bond bullishness to huge 2020 returns, giant 2021 losses
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Inflation fears that just drove the Treasury market’s biggest quarterly loss in decades are a “psychosis” that will fade over the course of the year, according to Hoisington Investment Management Co., among the biggest U.S. bond bulls.
“Contrary to the conventional wisdom, disinflation is more likely than accelerating inflation,” according to latest quarterly report from the firm, which manages about $5 billion in Treasuries. After moving higher in the second quarter, the annual inflation rate “will moderate lower by year end and will undershoot the Fed Reserve’s target of 2%,” and “the inflationary psychosis that has gripped the bond market will fade away.”