CNBC: Hayman Capital Kyle Bass Predicts US Interest Rates will Head Back to Zero in 2020

March 05, 2019

Article by Berkeley Lovelace CNBC financial

Hayman Capital Management founder Kyle Bass expects interest rates will head back to zero in 2020 as the U.S. and the rest of the world enter into an economic recession.

Bass told CNBC's Brian Sullivan that the economic stimulus from President Donald Trump's 2017 tax cuts will wear off toward the end of this year. The lack of fiscal stimulus and resulting economic downturn may force the Federal Reserve, led by Chairman Jerome Powell, to cut interest rates.

The central bank's current policy rate is between 2.25 percent and 2.5 percent.

"Southeast Asia is headed for a recession in 2019. Europe is headed for a recession in 2019," the hedge fund manager said in an interview that aired on "Worldwide Exchange" on Tuesday. "The world is not just going to have a recession while the U.S. is going to keep growing."

Most economists, as well as some the world's business elite, agree that economic growth is slowing and some predict that the global economy is headed for a recession as soon as this year.

The market had been under serious pressure since early October in part on concerns about a trade war and the aggressiveness of the Fed's rate-hike policy. Stocks in December plunged in their worst Christmas Eve trading ever, with the S&P 500 sinking 2.7 percent and slipping into a bear market, defined as a decline in an index or asset of 20 percent or more from recent highs.

Bass made a name for himself in 2007 with a lucrative bet against the subprime mortgage market. He made a huge currency bet in 2016 against the Chinese yuan, predicting it would depreciate by as much as 30 to 40 percent.

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