It may be rare for a fund manager to talk down the very asset class he's investing in. But bond fund manager Stewart Cowley is so bearish on bonds, he's actually taken a net short position that benefits when bonds drop.
"The bond bear market started in August 2012, and frankly, long-term interest rates should be about 1.5 percent higher than they are today," Cowley said on "Futures Now" on Tuesday. "And that means substantial capital losses coming in what is a rigged market in the United States."
When Cowley says the market is "rigged," he's referring the to outsized role played by the Federal Reserve. The Fed has been buying $45 billion worth of Treasurys and $40 billion worth of mortgage bonds every month. This has boosted Treasury prices, and suppressed yields.
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But Cowley, who is the head of fixed income at Old Mutual Global Investors, predicts that this quantitative easing program will soon come to a close.
"The process has reached an end now," Cowley said. "The reality is the America doesn't need quantitative easing anymore."