Priya Misra 3.2 14 ideas

Priya Misra explicitly recommended "owning some 2-5 year Treasuries" because they are higher due to market pricing of inflation and growth shocks. She argues that the market has overreacted to inflation fears, and if growth slows non-linearly from higher oil prices, interest rates are likely to decline, making front-end Treasuries attractive. LONG on 2-5 year Treasuries as they provide value and are positioned to benefit from potential Fed rate cuts if economic growth weakens. Sustained high oil prices leading to persistent inflation could prevent Fed cuts and cause yields to rise further.

Priya Misra stated that bond market technicals are improving, price-sensitive buyers are returning, and people are looking at yield backups as levels to buy. The market has deleveraged and derisked, creating a more stable base. Higher yields (e.g., 5.5-6% in credit) are attracting buyers. If the oil shock leads to a growth slowdown, it would also be supportive for Treasuries. LONG because yields at current levels are creating value and attracting buyers, with improving technicals after a period of deleveraging. A prolonged, uncontained inflationary spiral from the oil shock forces the Fed to consider hiking rates.

"As consumer spending starts to slow down I think Fed rate cuts will come back on the table. I think the 10 year, 4.25% or higher starts to add value." The market is currently pricing in stagflation due to the oil shock, causing a selloff in Treasuries. However, the resulting pain at the gas pump will crush consumer discretionary spending, leading to a broader economic slowdown. Once the "growth scare" materializes, the Fed will be forced to cut rates, driving bond prices up. LONG. Buying long-duration Treasuries at elevated yields offers an asymmetric hedge against an impending consumer-led recession. Inflation becomes structurally unanchored, forcing the Fed to hike rates despite slowing growth, which would cause long-duration bonds to sell off further.

I mean you talk about the data center I would say AI related supply. If it's the hyperscalers. We actually like those business models. We like the fact that they don't have a lot of debt. Hyperscalers are issuing debt to fund massive AI and data center buildouts. Because their underlying business models are highly cash-generative and they carry low leverage compared to other sectors, their corporate debt and equity remain high-quality and resilient even in a higher-for-longer interest rate environment. LONG hyperscalers due to their strong balance sheets and ability to fund secular AI growth without dangerous leverage. AI monetization takes longer than expected, or heavy capital expenditures drag down free cash flow margins.

I think owning some short duration treasuries is actually a hedge against growth slowing down credit fears. High oil prices act as a tax on consumers who are already drawing down their savings. If this stagflationary shock causes economic growth to slow, short-duration Treasuries will provide attractive yield, liquidity, and downside protection against credit market volatility. LONG short-duration Treasuries as a defensive yield play while the Fed remains in a wait-and-see mode. Inflation re-accelerates significantly, forcing the Fed to hike rates instead of cutting, which would negatively impact bond prices.

The 10-year Treasury yield pushed toward 4.25% - 4.50% early in the session. Subsequently, payrolls printed a shocking -92k jobs. Misra argues that 4.25% is a "buy zone" because the oil shock acts as a tax on the consumer, eventually destroying demand. Collins agrees, viewing 4.50% as an overshoot and fair value closer to 3.50%-4.00% as the Fed is forced to cut to save the labor market. Long Duration. The weak payrolls print confirms the "bad news is good news" for bonds thesis, overriding short-term inflation fears from oil. Stagflation where the Fed is forced to hike/hold despite weak growth due to unanchored inflation expectations.

Misra notes we are in a "plateau of uncertainty" regarding Section 122 tariffs and potential refunds. Tchir adds that the "Liberation Day" trade (tariff removal) was killed by the immediate reimposition of 15% tariffs. Uncertainty kills hiring and CapEx (outside of AI). The economy is resilient but not re-accelerating. If uncertainty persists, the Fed is more likely to cut rates to cushion the labor market. Bonds provide the necessary ballast in a portfolio during policy chaos. LONG US Treasuries. Yields have room to fall as the "no landing" scenario gets priced out in favor of a "soft landing" or policy-error slowdown. A sudden resolution to trade policy or a spike in inflation data.

"We continue to characterize the job market as a low hire, low fire one... fragile... We're finding high quality credit... and then we like to hedge... owning some duration." The economy is not overheating, it is stalling at a high level. In this environment, you want yield (Credit) but you need protection against a sudden labor market crack (Treasuries/Duration). Long Barbell Strategy (Credit + Duration). Inflation re-accelerates, forcing yields higher and hurting both bonds and credit spreads.