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Hasenstab, who is the CIO of the Templeton Global Macro fund and
made his name with audacious bets on Irish and Hungarian bonds
among others, noted that knee-jerk U.S. yield falls had been
followed by sharp rises that took the 10-year yields above 2
percent after the shock election win for Donald Trump.
"I think the reaction in Treasuries...reflected two aspects:
(Treasuries) were in a bubble that was shocked, and there is
some concern the U.S. election outcome will only exacerbate the
rising inflationary pressures that were already happening," he
said in a note sent to clients on Thursday.
"When we think through the possible implications of some of
Trump's proposals which have to do with increasing tariffs, the
most immediate implication is increasing prices — which is
inflation."
Hasenstab who has been increasing holdings of Latin American
bonds for some time, said the post-election selloff had
presented investment opportunities in South America and praised
the fiscal and monetary policies in some of the countries.
"Looking ahead, we continue to expect rising inflation in the
United States, rising U.S. Treasury yields, depreciations of the
Japanese yen and euro, and currency appreciations across a
select set of emerging markets," he added.
(Reporting by Sujata Rao and Karin Strohecker)
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