Markets

Scott Minerd says stocks have further to fall, but he's buying bonds: 'We're in the value zone'

Key Points
  • "We tried to stay as close to the sidelines as possible, but that's changing for us," Scott Minerd told CNBC's Brian Sullivan on "Fast Money."
  • Minerd said last month that markets were in "the ludicrous season."
  • Funds that tracks high-yield corporate and municipal debt have been pummeled since late February, falling along with stocks.
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Scott Minerd: We're in the 'value zone'

Guggenheim Global's Scott Minerd, who was raising alarm about the debt market even before the coronavirus pandemic roiled global markets, said Thursday he is starting to buy bonds in certain areas.

"We tried to stay as close to the sidelines as possible, but that's changing for us," Minerd told CNBC's Brian Sullivan on "Fast Money."

Since Minerd's warning that markets were in "ludicrous season," the S&P 500 has fallen 29% below the record it hit in February, while the key 10-year Treasury yield has whipsawed from record lows to back above 1% as the Federal Reserve slashed interest rates and rolled out its programs from the financial crisis to stabilize credit markets.

Minerd said that the market chaos has led to forced selling by mutual funds and hedge funds, creating attractive opportunities in spaces "like in municipal bonds or selected asset-backed securities."

"The bond market has only traded cheaper than where it is right now for credit securities like corporate bonds and high yield about 10% of the time. This is telling you that we're in the value zone," Minerd said.

Funds that track high-yield corporate and municipal debt have been pummeled since late February, falling along with stocks. Recent weeks, however, have seen days where safe assets like U.S. Treasurys have also lost value. 

Minerd said that equity markets, however, could still fall by another 10% to 15%.

"I am starting to be more positive because one of the things that I've been talking about is I'd like to see capitulation … and we're starting to get that sense in selected parts of the fixed income market. I haven't seen that sense of panic in stocks," Minerd said.