The Compound and Friends Real Men Don't Panic Over Bonds
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May 23, 2025 Richard Bernstein, CEO and CIO of Richard Bernstein Advisors and former chief investment strategist at Merrill Lynch, joins the conversation to dissect the current bond market and economic uncertainties. He stresses the importance of understanding fiscal policies wrapped in the Big Beautiful Bill and shares insights on international stocks. They delve into strategies for hedging against uncertainty, highlighting bonds and gold as safe bets. The discussion also touches on the implications of rising mortgage delinquencies and the ongoing dynamics of tech-heavy portfolios.
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Tax Bill Stimulates but Increases Deficits
- The new tax bill will stimulate economic growth but increase deficits significantly through 2034.
- Tax cuts won't pay for themselves, so expect more debt and interest costs.
US vs German Yield Spread Insight
- US Treasury yields have sold off relative to German bunds since 2011 despite the US being AAA.
- This reflects a slow bleed of higher rates, not a sudden crisis, affecting costs across the economy.
30-Year Treasury Rate’s Historic Rise
- The 30-year Treasury rate is at its highest level since 2007 with the fastest rise in Bernstein's lifetime.
- It deserves more attention, but shouldn't trigger panic about a sudden crisis.
