Treasuries' Dark Horse: Ninety One Manager Bets on Long-Dated Bond Comeback
Ninety One's portfolio manager Jason Borbora-Sheen is bucking the trend by betting on long-dated Treasuries amidst inflation concerns. He believes that these bonds are oversold and due for a comeback, driven by his thesis that inflation is heading lower.
Borbora-Sheen's strategy centers on a relative bet: 30-year Treasuries outperforming 10-year notes, which runs against the grain of the yield-curve steepener trade. The selloff in long-dated bonds since July has created what he sees as a mispricing opportunity.
The key to his thesis is Fed Chair Kevin Warsh's credibility on inflation. Warsh has been vocal about having 'no soft inflation target,' and Borbora-Sheen believes that if Warsh's policies succeed in bringing down inflation durably, the market will have to reprice its doubts. This repricing would benefit long-dated bonds, exactly where Borbora-Sheen is positioned.