'Something Has To Give' On US Fiscal Policy: Patterson

Summary

Rebecca Patterson argues that US fiscal deterioration and Treasury-driven rate volatility make long-duration bonds unattractive and favor cash, short-term fixed income, and gold. She sees the US dollar as rangebound rather than about to collapse, while flagging AI stocks and corporate credit as systemic risk catalysts. On personal investing, she avoids crypto because she cannot establish fair value.

• US public debt exceeds $40 trillion; Patterson says deficit spending, inflation, and rate volatility make long bonds risky.
• She prefers cash/short-term fixed income and gold over longer-duration Treasuries.
• She views the US bond market as taking on emerging-market-like volatility but stops short of calling for a dollar collapse.
• She warns an AI sentiment shock could hit stocks and spill into global corporate bonds.
• Possible fiscal adjustment catalysts include sticky inflation, an AI selloff, or overseas debt crisis contagion.
• She is agnostic on crypto and avoids it due to lack of fair value and idiosyncratic drivers.
• She advocates long-term asset allocation over market timing for most investors.