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Excerpt from fund manager John Hussman’s weekly essay on the US market:

In bonds, the Market Climate was characterized by relatively neutral valuations and neutral market action. These also are not conditions that are permanent or normal, but are part of the normal market cycle that includes both attractive and unattractive conditions. While I do believe that economic conditions are softening, I don't believe that this automatically makes a bullish case for bonds.

Such thinking assumes that bond yields will move in a pro-cyclical way, which is only a good assumption if one believes that inflation will also be pro-cyclical (slowing if the economy slows). For reasons I've noted in prior weekly comments, that's not a safe assumption here. Until we observe credit spreads widening, indicating a skittishness toward credit risk that would create a demand for safe government liabilities (cash and Treasury securities), the most likely outlook here is softer economic growth but relatively persistent inflation. The Strategic Total Return Fund retains a duration of about 2 years, mostly in Treasury inflation protected securities, and about 12% of assets in precious metals shares.

Source: John Hussman on Allocation to Bonds and Gold