00:00What do you make of these moves and do you think we're overdoing it at the front end of the
00:03U.S. curve.
00:04So I think that the U.S. is in a specific situation since the Fed has a dual mandate and
00:09we were already uncertain about the labor
00:11market going in to this series of events. Europe the U.K. that makes more sense given how we would
00:18expect monetary policymakers to react
00:20there. I do think that it is not the type of move to jump in front of because there's so
00:26much uncertainty
00:27associated with what's going on in the Middle East and how that's going to continue to play through to
00:32the energy sector. We could get one hundred and twenty five one hundred and thirty dollar a barrel
00:37oil very easily if this continues to unfold in a scale that is measured in months not weeks as it
00:45was originally intended. I'm struck by the yield curve which is rapidly compressing rapidly narrowing.
00:51People are expecting that higher front end yields are going to send growth substantially lower and
00:55perhaps even more so in the euro region. How much confidence do you have that that is the correct
01:01move that there is going to be a move much lower say in 2027 in response to holding rates higher
01:08whether
01:08it's hiking or whether it's just a hold. I think that a flatter curve in this environment makes sense.
01:14I think 10 and 30 years should outperform because if the Fed does fight inflation delays rate cuts then we
01:22should see break evens compress over time and nominal rates slip lower. What I'm worried about is I'm worried
01:29about the fact that we haven't fully integrated what happens to demand in this situation. What happens to
01:37the fact that we have higher prices at the pump that leads to consumers needing to make some hard choices
01:44and we could see consumers under a lot of stress over the next several quarters which undermines the strong
01:51growth argument in the U.S. which is kind of defined us for the last couple of years. So and
01:55when you put
01:56this shock together is it bullish or bearish for fixed income for bonds for treasuries. I think it's long term
02:02bullish
02:02for treasuries. Lower rates remains my base case. I think 10 year yields are below 4 percent by the end
02:08of the year and I
02:09think that the two year sector is going to continue to struggle.
Comments