Steven Van Metre

Speaker adjusted his portfolio hedge from short-term to long-term treasuries (e.g., TLT). Believes large commercial banks are "massive buyers" providing a floor, as they prefer safety over lending into a breaking credit cycle. A weakening economy and credit cycle (e.g., private credit stress) will lead to disinflation after a short-term oil-driven inflation scare. Banks will allocate to safe government bonds, and the monetary system will require lower rates to function if credit contracts. Long-term treasuries are a hedge against the equity downturn he foresees, with limited perceived downside due to institutional buying support. Persistent inflation forces the Fed to hike or hold rates higher for longer, and bank buying support falters.