Off The Desk On Tradeweb Bond Market Mastery: Harley Bassman on Mortgages, the Fed Rates and Convexity
Sep 23, 2024
In this engaging discussion, Harley Bassman, the "Convexity Maven" and managing partner at Simplify Asset Management, shares his insights on the bond market and mortgage-backed securities. He dives into the evolving dynamics of mortgage rates, emphasizing their impact on housing. The conversation also explores the Federal Reserve's interest rate strategies and the implications of an inverted yield curve. Bassman highlights innovative trends in the bond market and personal growth through travel, stressing the importance of trust in finance.
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MOVE Index Reveals Bond Volatility
- The MOVE Index measures bond market volatility similar to how the VIX measures equity volatility.
- Bond market implied volatility has recently surged while equity volatility has remained steadier.
Fed Rate Cuts Will Be Cautious
- The Fed is likely to cut rates cautiously to protect its legacy on controlling inflation.
- Rapid rate cuts seem unlikely until inflation is decisively under control.
Forward Rates Are Arbitrage Signals
- Forward rates represent arbitrage-driven break-even rates, not forecasts.
- Current inversion demands rapid rate cuts, which seem unlikely without a crash landing.
