Meghan Swiber 5.0 2 ideas

We are long rates because we expect the Fed to cut rates due to a K-shaped economy where the top income cohort can weather higher oil prices but the bottom part is struggling. Economists are calling for two more cuts this year. We like being long the front end and belly of the curve.

The curve can steepen more as easing expectations come back; the market is pricing only a 50% chance of one ease by year-end, so as expectations for cuts increase, the front end should rally more than the back end, leading to steepening, though it may be more range-bound than in past years.