Loomis Sayles managers bet on higher rates


"The market is very complacent right now in terms of the valuations," says Matthew Eagan, co-manager of the Loomis Sayles Bond Fund. Along with co-managers Dan Fuss and Elaine Stokes, Eagan has doubled its short-term U.S. and Canadian debt holdings to 27% of AUM - a bet government bond rates are about to move higher.

"The global economy is strong enough to support the Fed’s decision to continue the taper and eventually raise rates by the middle of 2015," says Eagan. "We want to be prepared for that to happen."

Eagan's fund has outperformed 98% of its peers over the last five years.

In today's action - as the FOMC is in day one of its 2-day meeting - the 10-year Treasury yield continues go its own way - off another three basis points to 2.46%. TLT +0.4%, TBT -0.8%

ETFs: AGG, BOND, BND, SCHZ, LAG, SAGG, GBF, IUSB

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Comments (7)
  • trexljoo1
    , contributor
    Comments (2) | Send Message
     
    Each .1% increase in the 10 year T rate will cost taxpayers $18B in national debt interest. If the rate went up a full point, it would be $180B. Does Loomis really think the Fed would willingly allow this to happen? US rates are already at a premium relative to EU rates. Why raise them?
    29 Jul 2014, 05:28 PM Reply Like
  • Joe Springer
    , contributor
    Comments (2644) | Send Message
     
    Right trexljoo1, tomorrow be a big up day..
    29 Jul 2014, 06:46 PM Reply Like
  • GamCap LLC
    , contributor
    Comments (484) | Send Message
     
    Sure, why not just put the FED rate to zero at the mere whiff of economic weakness??? Actions have consequences, such as the bubble we have in fixed income and contributing to pockets of froth in the equity markets. Spanish 10yr's @ 2.50% and Italians @ 2.70...all time low yields...is just plain moronic. These bond fund managers are having the same issues as internet/tech stock funds in 1999...they have pressure to put the funds to work...miss the benchmark 2 many times and ur out of a job.

     

    Extremely low rates are inflationary...just a question of when. Remember, absence of evidence, is not evidence of absence.
    30 Jul 2014, 12:52 AM Reply Like
  • Ishi Kenjo
    , contributor
    Comments (311) | Send Message
     
    This administration doesn't care about the national debt size or risks accumulating. It is just play money to them. They are 100% political all the time. They do care about spending on partisan & union causes but little else. If I was wrong they would have invested in real major infrastructure upgrades and small business loans to allow the hiring of high paying full-time employees throughout the country. The economy could really be booming if the Trillions spent to double our debt had been put to proper use!
    30 Jul 2014, 01:45 PM Reply Like
  • Herb Smith
    , contributor
    Comments (554) | Send Message
     
    Ishi Kenjo, did you know that the administration has been advocating for years for additional infrastructure spending? And the House GOP has refused to take up the bill, despite the support of the Chamber of Commerce and others?

     

    trexljoo1, As far as the Fed is concerned, the cost of interest on the debt is a federal budget problem and not their problem. The Fed has other priorities. In testimony to the Congress, the Bernanke has practically begged them for more expansive fiscal policy. that means, in effect, don't worry about the debt, and instead focus on getting the macroeconomy back to full capacity.
    2 Aug 2014, 07:39 PM Reply Like
  • pollyserial
    , contributor
    Comments (1113) | Send Message
     
    Are reasonable people really expecting no trouble to accompany the completion of the taper? Why don't we just see what happens there and then think about whether rates are going up.
    29 Jul 2014, 06:45 PM Reply Like
  • IncomeYield
    , contributor
    Comments (3700) | Send Message
     
    How much money has been lost over the past 30 years trying to short and time the bond market?
    29 Jul 2014, 08:57 PM Reply Like
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