Bonds are best investment in 2014, analyst says

Bonds best investment in 2014: Pro
Bonds best investment in 2014: Pro   

A rally in the U.S. bond market on Tuesday sent yields for 30-year Treasury bonds below 3 percent for the first time since May 2013, and one bond analyst expects that rally to continue.

"The economy has been lackluster for years. I think it's more of the same this year. Earnings have not been that great … inflation is low, yields are microscopic in Europe and there should be a capital flow into the U.S.," James Bianco, president of Bianco Research, said in an interview with CNBC's "Closing Bell."

"There is only one reason that yields should go up right now, and that would be a return of inflation, which we don't have."

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In fact, he said bonds have been the best investment this year.

"The 30-year bond has returned you 23 percent this year. It will probably continue that way … because the fundamentals are still there," he added.

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Anxiety about a slowing global economy sent investors flocking into bonds on Tuesday as safe-haven bids for low-risk government debt.

Bianco said he also doesn't see the U.S. economy improving enough to "go to another level," which would in turn send yields higher.

"It's just more of the same … a C-minus kind of economy. It's not a recession and that's been very constructive for the bond market," he said.

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—Reuters contributed to this report.