00:00We're just about five hours away from that 8 p.m. deadline that President Trump set when it comes to
00:05Iran.
00:06Of course, you think about what he posted on social media this morning.
00:10Obviously, the stakes are very high.
00:12You wouldn't know it by looking at the markets right now.
00:14You certainly wouldn't know it by looking at the 10-year Treasury yield pretty much flat on the day.
00:20I wonder what you make of this sort of non-action when it comes to the bond market and markets
00:25overall.
00:27So I take a couple things.
00:29First of all, thanks for having me on, by the way.
00:31I did say a couple things.
00:32First of all, markets, the level of uncertainty is extraordinary.
00:35You know, being active in the markets and trading in the markets today, particularly more so in the equity market
00:41today, the depth of the markets is incredibly shallow.
00:46When you go to execute something, you see how the market moves.
00:49There is not a lot of certainty.
00:51There's not.
00:51And so markets tend to, particularly in the rates market today, it is, you know, we've backed up rates and
00:56backed up a decent amount.
00:57I agree with the commentator before who said front end of the yield curve in the U.S. I think
01:02is interesting.
01:03And, you know, now that you're not certainly not pricing in anything in the way it cuts.
01:07So, you know, it's a period of stasis.
01:09I will say one thing.
01:10People watch that rally you saw in the equity market last week.
01:14The technicals in the equity market are phenomenal.
01:17The earnings growth dynamics are still very good.
01:20And so if you had good news, market would rally significantly.
01:25The problem is you just don't know how or when.
01:28And so today, you know, there's a lot of sitting on people's hands.
01:32And you see that in the depth of the markets as being incredibly shallow.
01:36Well, I'm curious.
01:37I mean, you mentioned what we saw in the equity markets, a big rally, relief rally going through last week.
01:43It feels like you haven't seen that same dip-pying impulse, or at least not to the same degree, when
01:48it comes to the bond market, particularly the Treasury market.
01:52And I wonder whether, you know, you're watching this sell-off and you think about where rates are right now
01:57and whether that presents as a buying opportunity to you.
02:01So, you know, today, I think the front end is well-priced.
02:06And I think, quite frankly, I'm in a mode today of, A, staying conservative until you get more data.
02:11You know, I'd say we're pretty good investors at markets that are predictable or, you know, when you anticipate and
02:18can use your data to analyze what the oncoming situation looks like.
02:23This is pretty unpredictable.
02:24And you talk about when you move prices of major commodities around with the speed of what you're doing, pretty
02:31hard to do that.
02:32And it's pretty hard, quite frankly, when you have such a range of outcomes in oil prices and the commensurate
02:38impact on inflation to say, gosh, I'm really going to drive into the rates market today.
02:44That's a pretty bad answer in terms of, but it is what it is today.
02:47The front end of the yield curve and the carry you get gets you, you know, you feel very comfortable
02:52with, A, there's a Fed that's not going to raise or the new Fed or however you interpret it, not
02:57going to raise rates.
02:58I think ultimately, and I think the commentator before said, you know, you've got a labor situation that's quite different.
03:04The starting point of where rates are, you have room to be accommodative.
03:09So, listen, the amount of carry we create in our funds, particularly keeping our duration in the front to belly
03:14of the curve, you know, this is one of those periods, you know, you just want to see, like, can
03:18we keep our portfolio stable, carry well through it,
03:23and then we're going to get more visibility on what the environmental condition is, and then you can lean into
03:27some risk a bit more.
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