Krishna Guha 2.0 2 ideas

The backup in Treasury yields has been driven by a repricing of Fed policy, not long-term inflation expectations. To get yields back down, you need the Fed policy pivot to return to its February trajectory, which requires either really bad economic data or a new Fed Chair convincing colleagues to cut. The Fed is on hold, policing the oil inflation shock. Bonds are attractive in theory if the shock is transitory, but the near-term path to lower yields is blocked without a dovish catalyst from data or leadership. WATCH because bonds are at elevated yields with a logical long-term value case, but the tactical setup lacks a clear near-term catalyst for a rally. The oil shock proves persistent and contaminates core inflation/wage expectations, forcing the Fed to maintain a hawkish stance longer, pushing yields higher.

10-Year yields are breaking below 4% despite hot PPI data. Credit spreads are widening. The bond market is signaling a "growth scare" or "flight to safety." Guha argues AI is disinflationary in the short term (wage suppression). Al-Hussainy notes a bid for liquidity due to private market jitters. LONG US TREASURIES (Duration) as a hedge against equity volatility and disinflation. Inflation re-accelerates significantly, forcing the Fed to hike or hold longer.