Ray Dalio: The Fed will not "cut interest rates significantly" and U.S. bonds are not a good investment

Billionaire investor Ray Dalio said he doesn’t expect the Federal Reserve to “cut rates aggressively” because the U.S. economy is “in a relatively good balance” and bonds are a risky investment given recent volatility in the Treasury market. “Treasuries are not a very good investment. We have interest rate risk in the bond market,” the Bridgewater Associates founder said Tuesday at the Greenwich Economic Forum. Dalio believes investors are being self-indulgent in betting on a quick rate cut. Last month, the Fed cut rates for the first time in four years, slashing the federal funds rate by 50 basis points. But a strong September jobs report gives policymakers room to slow down the pace going forward. The Treasury market has been volatile this year, with the 2-year Treasury yield oscillating between 3.5% and above 5%. Dalio said Treasuries make up a large portion of institutional investors’ and central banks’ portfolios and feel overweight. Geopolitical uncertainty is also a problem in the Treasury market, he added. “Foreign countries are worried about holding bonds” because they could be sanctioned, he said. In the wide-ranging interview, Dalio talked about the U.S. election and its potential impact on the market. The investor is bullish on former President Trump's economic policies, calling his proposal to lower corporate tax rates "more classic capitalism." "He made a very good point about the ability to raise tariffs," Dalio said, adding that he estimated Trump's tariff proposals could raise about $800 billion a year. He also said such tariffs would cause inflation. (Jinshi)