There has been a cascading effect on bond markets ever since the U.S. Federal Reserve signaled that it is willing to keep interest rates higher for longer in order to battle stubborn inflation.
The 10-year bond yield has jumped to a 16-year high in the U.S., and since the U.S. bond market is the world leader bond yields in Germany and Japan have also hit levels not seen in a decade.
Related: The 20 Best Bond Funds to Buy Now
These developments have spooked some of the bulls back in the U.S. and Jim Cramer, a leader of the bulls says there is nothing to fear from the global rise in bond yields.
"Don't fight the bonds. Let them get to where they have to go and then make your purchases," Cramer said on X, formerly known as Twitter, this week.
He even has a prediction for when the bond market will get back to normal.
More Jim Cramer:
- Jim Cramer thinks this meme stock is about to go bust
- Jim Cramer reveals why one popular investing method is a ‘sucker’s game’
- Jim Cramer says Cathie Wood doesn’t understand one basic investing rule
"The bond madness should slow when the twenty year yield crosses over the fed funds rate. I have been saying this since it hit 3.75% and I reiterate that it is my view wherever the fed funds rate goes to a 1/4 pt in November," Cramer said. "How many billions and billions of dollars were on the wrong side of the long end of the curve? It is staggering how much has been lost... and the short position has crushed it."
He also sees the current bond market as being suffocating for potential initial public offerings.
If the bonds don't cool down they will crowd out any deal like this and it won't be worth bringing it right now!!! https://t.co/xuZOimWfAq
— Jim Cramer (@jimcramer) October 2, 2023
Bond yields have proven to be stubborn, and after Cramer's prediction earlier this week that "bonds will not ignore a second down day in oil. There will be a short-cover rally if WTI touches $85," failed to materialize, he said there "there has to be some serious money betting short on that piece of paper."
And we cross 5% on the 20 year. Relentless destruction of capital.. relentless
— Jim Cramer (@jimcramer) October 3, 2023
The bond yield on the U.S. 20 year Treasury note was up 0.9% to nearly 5.1% at last check Tuesday afternoon.
Get investment guidance from trusted portfolio managers without the management fees. Sign up for Action Alerts PLUS now.
