Bloomberg Talks Marathon Asset Management Chairman & CEO Bruce Richards Talks Treasuries, Fed, Software Stocks
Jun 3, 2025
In this engaging discussion, Bruce Richards, the founder and CEO of Marathon Asset Management, shares his expertise on the current state of financial markets and Federal Reserve policies. He delves into the implications of rising U.S. government deficits on long-term treasuries, expressing caution regarding inflation's impact. Richards highlights the urgent need for software companies to adapt to AI technologies, revealing the potential risks and opportunities for investors in this rapidly changing landscape.
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Rising Deficits Threaten Treasuries
- U.S. deficits at 7% of GDP and $2 trillion annual debt growth raise alarm for long-term Treasury sustainability.
- Rising long bond rates could reach 6%, complicating government financing and causing price risk issues.
Fed's Cautious Inflation Approach
- Inflation is currently low around 2.1%, but tariffs could push it higher to 2.8%-3.2%.
- Fed will likely maintain rates to see how inflation develops despite other global central banks easing.
Higher Rates Cause Crowding Out
- Higher interest rates crowd out borrowing across sectors including municipalities, companies, homeowners, and commercial real estate.
- This crowding out negatively impacts markets and consumer spending.