Jeff Sherman of DoubleLine Capital stated that he remains bearish on long-term US Treasuries, believing that heavy government borrowing and weakening demand will continue to weigh on the market.
Concerns over AI-themed trades and turbulence in the French market spurred a return of safe-haven demand, driving a sharp rally in US Treasuries on Thursday.
However, in an interview, DoubleLine Deputy Chief Investment Officer Sherman said that the rebound in Treasuries from "oversold" levels does not mean the fundamental pressures facing long-duration bonds have changed.
Sherman said: "We remain significantly underweight long-term bonds in most portfolios, and are even short the long end of the yield curve, because these pressures will eventually materialize."
Sherman also criticized US Treasury Secretary Bessent's attempts to push down yields through rhetoric.
He said: "Bessent used very forceful language, like 'I'm the house, I have information you don't know.' The market didn't react well to that. If you want investors to buy in, you need to give them more confidence, not try to humiliate us."
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