As with James Grant’s analysis, the problem with Paul Tudor Jones’ assumption that rates MUST go higher is three-fold:
Central Banks will continue to buy bonds to maintain the current status quo but will become more aggressive buyers during the next recession. The Fed’s next QE program to offset the next economic downturn will likely be $6 trillion or more, pushing the 10-year yield towards zero.
All interest rates are relative. The assumption that rates in the U.S. will move substantially higher is likely wrong. Higher yields on U.S. debt attract flows of capital from countries with low to negative yields, pushing rates lower in the U.S. Given the current push by Central Banks globally to suppress interest rates to keep nascent economic growth going, an eventual one percent yield on U.S. debt is not unrealistic.