Vimal Gor on the future of bonds, currencies, and why he thinks shares can rally

Bond market and investment guru Vimal Gor says bond yields are likely to top out later this year and set the stage for another rally in stocks, bitcoin and gold. 

But the real catalyst for the risk rally will be more liquidity or money pumped into the financial system to offset the effects of President Trump's One Big Beautiful Bill Act (OBBBA), which will add to the US's debt load and worsen its fiscal problems, according to the strategist. 

"The primary driver of asset prices is liquidity, so you reach a point, and I don't think we're that far away from it now, where the Fed needs to come in and support bond yields," Gor tells The Rules of Investing Podcast. 

Gor now works as the Head of Fixed Income and Mulit-Asset at Ellerston Capital, after around 12 years leading the fixed income desk at Pendal and time in the digital assets space.

In this podcast we unpack his views on where to next for rates, bonds, stocks, currencies, gold, and bitcoin. 

Yield curve steepener

Gor says the headline-making steepening in the US government bond market's yield curve - where yields on longer dated US bonds climbed faster than yields on shorter dated bonds - means much of the market is positioned for a yield curve steepener trade. 

However, he says bond traders, including himself, must stay nimble and be ready to close out this popular position. 

"We're in a situation where the [bond] market is rebelling and having a tantrum and it's about a [US government] balance sheet revolt. It's about the size of the US budget, trade, and fiscal packages and there's lessening demand for US bonds and that's causing the back end of the US curve to steepen up," says Gor. 

The strategist reckons the US Fed will need to cut cash rates at least four times before the end of 2026 to support the economy as growth slows. 

"And for that reason we've curve steepeners on," he says. "We strongly believe you can be long [US government bonds] anywhere out to about five years in the US."

"The back end (US government bonds on maturities of 10 to 30 years] we are concerned about the fiscal picture. 

"But if [long end bond yields] dislocate and start going higher, you know, you're guaranteed that someone whether it be the Treasury or the Fed come and support the market.

"Our expectation is they start QE  again later this year. There does come a point where the US authorities have to support the bond market, so even though every bit of data tells you the back end should sell-off it's very dangerous to be outright short the back end."

At the time of the podcast on June 4, the yield on US 10-year treasuries stood around 4.41% and the 30-year was at around 4.96%.

Fiat, digital, and hard currencies 

Gor adds that if President Trump's 'Big Beautiful Bill' is passed by the US Senate the consequences won't be beautiful, other than for the rich who'll win from an extension of big tax cuts and soaring asset prices. 

He argues OBBBA and its capacity to fuel worries over the US fiscal position will push the US dollar perhaps another 20% to 30% lower over a basket of major currencies, including the Australian dollar. 

"I think all currencies will advance relative to the greenback," says Gor. 

He also outlines numerous reasons to support this view, including the fact that big-hitting capital allocators such as pension funds or governments are likely to invest less in US dollar assets ahead. 

"So the way we're playing it is a short US dollar trade, rather than long Australian dollar, that's the way we're focusing on it," Gor says.

Gold and is bitcoin a limited supply of nothing?

Gor's expectation for a Trumpian liquidity rush fuelled by debt and lower rates later this year, means he's also bullish on gold as the US dollar loses value. 

The strategist also suggests that central bank buying of gold is likely to push the precious metal's price higher as Trump's trade wars, border closures, and adversarial policies push governments to find alternative investments to US treasuries. 

"$US5000 [an ounce] is a very realistic target over the next couple of years [for gold], and potentially in the medium term you could go a lot higher than that. I mean $US10,000 isn't outlandish."

"The key thing to remember about gold as well is that the US owns a lot of it on the balance sheet and it has marked it at a very low level. So the US authorities and I'm sure [US Treasurer] Bessent in particular would like a higher gold price."

The podcast also features a discussion on bitcoin as the hottest asset class on the planet over the past couple of years, even though Ellerston itself is not an investor. 

Gor reckons the online token is far from a limited supply of nothing and is in fact "a market changing technology."

"I call it tradable gold," he says. "I don't understand why anyone would buy gold and not buy bitcoin because bitcoin is digital gold. So if you like gold you should like bitcoin even more."

If you want to hear more from Gor on why he thinks stocks or other hard asset classes are set to rally as the bond market sell-off reverses, please listen to the whole podcast and don't forget to subscribe on Apple or YouTube. Thanks.