Negative US bond yields? Don't rule it out
Guggenheim's Scott Minerd said Wednesday he is worried that the overflow of negative bond yields in Europe could push U.S. Treasurys to "unsustainable levels."
"If 10-year bunds (NYSE Arca: BUNL) were to go to a negative yield, could we see U.S. Treasurys and the 10-years at 1 percent or lower?" he asked during an interview on CNBC's " Squawk on the Street ." "I wouldn't rule it out."
Minerd, Guggenheim's global chief investment officer, said negative yields are primarily a reflection of the inconvenience of cash storage. It's cheaper for people to store their cash in bonds rather than pay for a vault.
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The key to fixed income, he said, is to buy long-duration, high quality bonds while offsetting them with a lot of short-term, floating rate securities.
"So if rates rise, the portfolio should do well and if rates come down, we are insulated," he said.
Minerd said he wouldn't be surprised to see a very weak GDP number for the first quarter. "I wouldn't even rule out a contraction at this point, so I think the weather is having a massive impact on the data here," he added.
We should expect to see a pretty good bounce back in the second quarter given the positive gains in housing activity, he said.
"As rates come down, that is going to give us stimulus into the second quarter, the third quarter, so I don't see a real negative outlook," he said.
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