Market 08/14: Hedge funds double down on shorting bonds

Government bond yields head for new highs. “Bond King” Bill Gross says bonds are “overvalued”

10-year bond yield has risen to the highest level since November last year, reaching 4.2% earlier this month ahead of expectations of persistent inflation, while supporting USD gains.

Gross believes both the stock market and bonds are overvalued, meaning bond yields are too low. He said the fair value for the 10-year government bond yield is around 4.5% versus the current 4.2%.