Yulia Alekseeva 5.0 2 ideas

Alekseeva stated "duration right now is not the place," citing structurally higher term premium and market volatility driven by overlapping shocks. Persistent inflation shocks (e.g., oil) and a "structurally higher term premium" create a bias for curve steepening, making long-duration bonds vulnerable to price declines. Long-dated Treasuries carry unattractive risk/reward due to elevated volatility and sensitivity to inflation expectations, favoring other parts of the curve. A rapid de-escalation in geopolitics and a sharp drop in inflation expectations cause a rally in long-end bonds.

Alekseeva stated duration is "not the place," but "we still like the front end" as a better risk/reward, expecting more rate volatility and gradual curve steepening. The front-end is anchored by a Fed on hold, while term premium and inflation shocks drive volatility in the long-end. Higher money market assets ($8T) show strong demand for short-term yield. Front-end Treasuries offer attractive yield with less volatility and downside risk compared to long-duration assets in a "higher for longer" environment. The Fed surprises with rate cuts, diminishing the front-end's yield advantage.