LONDON (Reuters) - Star bond investor Michael Hasenstab said global markets' reaction to the U.S. election outcome showed that U.S. Treasuries had been in a "bubble that was shocked" and predicted rising inflation and higher yields ahead.

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)