Firm known for multi-decade bond rally call now sees structurally higher yields and inflation above Fed targets.
Hoisington Investment Management has slashed its Treasury duration to under one year from over 20 years, signaling a bearish pivot on bonds. The firm, which managed roughly $2 billion, now expects inflation to settle between 3.5% and 4.5%, with risks of spikes above 5%, well above the Federal Reserve’s 2% target.
The shift follows decades of correctly predicting declining yields but reflects growing concerns over structural deficits and AI-driven capital spending. Markets have long priced in lower inflation, but Hoisington’s move aligns with broader fears of persistent fiscal pressures and bond supply.
The reversal has drawn attention from investors, including Jeffrey Gundlach, who cited it as validation for his own bearish outlook. The firm’s warning of higher-for-longer yields is gaining traction among fixed-income managers amid rising debt issuance and inflation risks.