Investors can buy duration safely as Fed will remain on hold, says Allspring's George Bory

Summary

Allspring's George Bory discusses the new Fed regime under Chair Warsh, highlighting that the Fed anchored the long end, introduced uncertainty at the front end, and removed forward guidance. He expects the Fed to remain on hold as oil prices decline and an Iran deal nears, creating a safe window to add duration. Tactically, he favors the five-year part of the curve.

• Fed Chair Warsh established credibility and anchored long-end bond yields.
• Front-end rates now carry a large uncertainty premium with no forward guidance.
• Bory expects the Fed to stay on hold while data unfolds.
• Falling oil prices and a potential Iran agreement support a patient Fed.
• Elevated yields and improving summer data make adding duration attractive.
• The most attractive tactical opportunity is duration around the five-year part of the curve.