Ben Brown 1.1 2 ideas

Fed officials are pivoting from labor market concerns back to sticky inflation (Core PCE 2.8%). Rochester notes the recent rally in the long end is "untenable." If the Fed cannot cut rates (or must hike) due to sticky inflation, the inflation premium must be repriced into the long end of the curve. Yields on the 10Y and 30Y must rise (prices fall) to reflect this reality. SHORT. The market is mispricing the duration risk; the "pivot" is delayed or cancelled. A banking crisis or liquidity event forcing the Fed to cut rates rapidly despite inflation.