Ray Dalio Says Treasuries Have Been a Lackluster Investment

(Bloomberg) — Billionaire investor Ray Dalio said he doesn’t anticipate the Federal Reserve making “significant cuts in rates,” and that bonds are a risky investment given recent fluctuations in Treasury markets.
“Treasury bonds have not been a great investment,” the Bridgewater Associates founder said Tuesday at the Greenwich Economic Forum. “We have an interest rate risk in that bond market.” 
Investors are getting ahead of themselves by betting on rapid interest rate cuts, according to Dalio. The Fed cut rates last month for the first time in four years, slashing the federal funds rate by a half-point. But a strong jobs report for September is giving policymakers room to move at a slower pace going forward. 
Treasury markets have fluctuated this year, with the 2-year yield whipsawing between 3.5% and more than 5%.
Treasuries constitute a high percentage of institutional investors’ and central banks’ portfolios and feel overweighted, Dalio said. Geopolitical uncertainty is also an issue in the Treasury market, he added. 
“Foreign countries worry about holding bonds” because they could be sanctioned, he said.
In the wide-ranging interview, Dalio spoke about the US election and its potential impact on the markets. The investor was bullish on former President Donald Trump’s economic policies, calling his proposed lower taxes on corporations “more classically capitalistic.” 
“He makes a very good point on the ability to raise tariffs,” Dalio said, adding that he’d calculated that Trump’s tariff proposals would raise roughly $800 billion a year. 
He also said that such tariffs would be inflationary.
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