Gary Shilling Predicts 10-Year Bond Yield Will Fall to 1%

A. Gary Shilling has made some great calls over the past half century. Now, he is predicting that yields on the U.S. 10-year Treasury bond will fall to 1% from its current level of 1.75%.

“The majority of people somehow are looking for steady patterns and simplistic answers,” Shilling, president and founder of Springfield, New Jersey-based research firm A. Gary Shilling & Co., said in an interview. “They’re looking for something that fits into what used to be the regular cycles, but this is just not anything like that.”

Since the price of bonds is inversely correlated with interest rates, Shilling’s prediction can only come true if a massive rally in 10-year Treasury bond prices is ahead of us.

I myself have begun to consider long-term Treasury bonds to be (perhaps) a better investment overall for individual investors than the stock market. Economists like Shilling (author of The Age of Deleveraging) and Nobel Prize winner Robert Shiller (author of Irrational Exhuberance) cast doubt on the common advice from professional investment advisors that stocks should be the backbone of an individual’s retirement savings plan. I no longer trust that advice.

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