US long bonds near cyclical bottom
The guest argued that long-duration US Treasuries are poised for a significant rally as a looming growth scare drives yields down.
The argument
Despite widespread bearish sentiment on Twitter and rising yields, the guest's cycle analysis indicates a clustering of intermediate, seasonal, and three-year lows for the long bond. He expects a growth scare by the end of Q2 to trigger a flight to safety and force Fed rate cuts.
The thesis, stress-tested
✓ What validates it
- ✓US 10-year or 30-year Treasury yields peaking and starting to decline
- ✓The Federal Reserve shifting tone toward rate cuts by the end of the year
▸ Risks discussed
- ▸Persistent cost-push inflation from oil shocks prevents yields from falling
- ▸The Federal Reserve continues to hold rates higher for longer than expected
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