Are we entering a new era for the global bond trade?
Host
Matthew Diczok
We are not overly concerned about the global bond selloff from a US perspective. US real yields (approaching 2% on 10yr, ~3% on 30yr) look attractive relative to Germany (~0.75%) and Japan (0.35-0.50%).
How do you factor in the war and the energy shock? Which view is right: that it's inflationary or that AI is disinflationary?
Host
Matthew Diczok
It's a Rorschach test. The key question is not what the right answer is, but what the Fed Chairman's view is.
Matthew Diczok
Powell is a professional and is setting up the next Fed chair to be able to position however they want.
Matthew Diczok
This feels a lot like the mid-90s. We had a bond bear market from rate hikes, then a productivity boom from tech.
Matthew Diczok
The 2% inflation target isn't based on US financial history. The economy does fine at 3% inflation.
How would a new Fed chair like Kevin Warsh see the rate path?
Host
Matthew Diczok
Our belief is you'll probably get another two cuts this year. We expect at least one rate cut before the midterm elections (Nov).
Why do we need a rate cut if things are good?
Host
Matthew Diczok
The slow growth job market is a significant issue that might need a rate cut or two to address.
Matthew Diczok
The oil market is saying the energy price spike is not a sustained increase.
What's your advice to investors?
Host
Matthew Diczok
We are positive on the economy and very positive on the US vs. the rest of the world. We are overweight US equities.