For more than 30 years, Lacy Hunt was the go-to expert on long-term US Treasurys. His advice was consistent: buy and hold. That stance just flipped, shaking the foundation of bond markets and casting shadows over risk assets worldwide.

From Bond Bull to Bear

At 81, the chief economist at Hoisington Investment Management stunned investors by reversing his long-standing bullish view on Treasurys in the firm’s Q2 2026 report. This pivot is as striking as if Warren Buffett declared value investing obsolete. When the figure most associated with a trade switches sides, it’s a signal that market dynamics have shifted dramatically.

Hoisington’s original thesis rested on the idea that rising government debt would stifle economic growth through deflationary pressures, pushing interest rates lower for the long haul. This framework delivered solid returns and attracted about $5 billion in assets at its peak.

Changing Fundamentals and Inflation Outlook

The new outlook turns this on its head. Hoisington now forecasts long-term inflation between 3.5% and 4.5%, fueled by expanding fiscal deficits, trends toward deglobalization, and the crushing weight of government debt. As a result, the firm slashed its portfolio’s effective duration from around 21 years in late 2025 to under one year now.

Losses before this change tell the story: the fund fell 34% in 2022, with assets under management dropping from $5 billion to less than $2 billion. The market is clearly sensing a new environment.

Broader Market Implications and Crypto Angle

Jeffrey Gundlach, known as the “Bond King,” publicly recognized the importance of Hunt’s reversal as a reflection of a fundamentally altered market landscape. The higher inflation forecast also limits the Federal Reserve’s ability to slash rates aggressively, even if economic growth falters, as inflation remains stubbornly above target.

For crypto investors, this development adds fuel to the “digital gold” thesis supporting Bitcoin. Rising inflation driven by unmanageable debt levels aligns with arguments that a capped digital asset could serve as a hedge against fiscal recklessness. Hunt’s reasoning on inflation mirrors the Bitcoin bull case, but dressed in traditional economic terms.

This material is for informational purposes only and does not constitute financial advice.