A leading U.S. bond manager said on Friday he saw no double-dip recession on the horizon and the plunge in Treasury yields was overdone.
Dan Fuss, who as vice chairman at Loomis Sayles helps oversee $145 billion in assets, said in an interview that he believes U.S. Federal Reserve Chairman Ben Bernanke will do what it takes to keep the economy from falling back into recession.
"Will third- and fourth-quarter growth be negative? My guess is, no it won't," Fuss said. "It will be positive but at a disappointing rate."
Ben Bernanke signaled on Friday that the central bank could take "unconventional measures" to spur a faltering recovery amid fresh reports showing economic growth has slowed sharply.
But U.S. Treasuries prices fell sharply after Bernanke gave no hint of any new bond buying by the U.S. central bank, triggering the biggest sell-off in three months.
The 30-year long bond was down three points in price on the day, yielding 3.67 percent versus Thursday's close of 3.51 percent.
Regarding the recent plunge in Treasury yields, Fuss said: "From a valuation viewpoint, yields were down so much and the move was looking silly."
Bernanke's speech followed new data showing the U.S. economy grew at a much slower pace than first estimated in the second quarter.
But the fresh reading was not as low as economists had been expecting. The government said GDP grew at an annual pace of 1.6 percent, down from the 2.4 percent it had estimated a month ago. But that was above the 1.4 percent forecast in a Reuters poll of analysts.
© 2017 Thomson/Reuters. All rights reserved.