Long-term bonds pose severe overstay risks
The bearish case argued for long-term US bonds is that secular headwinds, potential trade tariff rollbacks, and EPA regulation repeals make holding long-duration debt highly risky despite short-term safe-haven bids.
The argument
The speakers argued that any China trade deal lifting tariffs would act as a deflationary tax cut, boosting the economy but hurting yields. They also noted that repealing EPA regulations would act as another economic tailwind that is bad for yields, making long-term bonds a dangerous 'third rail' of finance to overstay in.
The thesis, stress-tested
✓ What validates it
- ✓A China trade deal lifting tariffs
- ✓Repeal of EPA regulations
▸ Risks discussed
- ▸Short-term safe-haven bids can temporarily drive bond prices higher
Hear it yourself
"But if if there's anything that those get repealed, you know, again, good for the economy, bad for yields. So I just you know, kudos to the people that have long TLT and and long bonds as and played the safe haven, but overstaying your welcome there scares the living daylights out of me."
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