George Goncalves, head of U.S. macro strategy at MUFG, joins the Julia La Roche Show to discuss why 2025 will be a "balancing act" as markets transition from record highs to new economic realities. In this wide-ranging conversation, Goncalves explains why the Trump administration faces a critical choice between taking "short-term pain for long-term gain" early in the term or continuing fiscal largesse, analyzes why the 10-year yield breaking above 4.75% could trigger market turbulence, and breaks down why the Federal Reserve needs to keep cutting rates to avoid a recession in the second half of the year.

Links:

https://x.com/bondstrategist

Timestamps:

00:00 Welcome to George Goncalves

01:17 Background and macro framework

03:15 2025 as a "balancing act"

05:35 Market complacency and valuations

07:19 Short-term pain for long-term gain

09:43 Business vs. government-led growth

11:01 Different starting points from Trump 1.0

13:38 Economy propped up by fiscal spending

16:21 Interest rates and fiscal policy

17:14 Bond market dynamics explanation

21:43 Credit market implications

23:26 Soft landing analysis

28:01 Market euphoria and transition risks

29:41 Deficit and debt analysis

33:05 Scott Bessent's 3-3-3 plan analysis

34:40 Fed policy outlook for 2025

39:15 Closing thoughts on dollar and oil