Ashok Bhatia 5.0 2 ideas

"We think the bond market has this wrong. We don't think the ECB, Bank of England will be hiking. Bond markets should be thinking about more Fed easing, not less... Treasuries will work as a hedge on a significant economic slowdown." The market is currently pricing in sustained high rates due to the immediate inflationary shock of $100+ oil. However, this energy spike acts as a regressive tax that will crush consumer spending and trigger a broader economic slowdown. When growth stalls, central banks will be forced to cut rates, driving bond prices higher. Long US Treasuries as a hedge against an impending macro growth shock, fading the market's current "higher-for-longer" pricing. If inflation becomes structurally unanchored and the Fed is forced to hike rates despite a slowing economy (true stagflation), long-duration bonds will suffer severe drawdowns.