Monetary Matters with Jack Farley The Convexity Maven’s Biggest Macro Trades of 2026: Why Bonds, Gold, and Debasement Matter Again in 2026 | Harley Bassman
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Jan 4, 2026 
In a thought-provoking discussion, Harley Bassman, the Convexity Maven and Managing Partner at Simplify Asset Management, sheds light on critical market dynamics. He argues that inflation will remain high due to demographic shifts and persistent fiscal deficits. Exploring the bond market, he highlights why newly issued mortgage-backed securities are appealing. Bassman offers practical portfolio hedges and emphasizes the significance of convexity in investing. He also advocates for gold as a unique hedge against fiat currency debasement, recommending a strategic allocation.
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Higher-For-Longer Inflation Drivers
- Harley Bassman argues inflation will stay structurally higher around ~3% due to demographics, spending, and immigration effects.
- He believes Boomers' wealth and household formation by millennials will sustain demand and wage pressure.
Fiscal Deficits Trump Short-Term Fed Moves
- Massive fiscal deficits (~6% of GDP) are a primary inflationary force independent of Fed policy.
- Bassman expects long-term nominal rates near nominal GDP, centering his 10-year target at ~4.35%.
Passive Flows Support Equities
- Passive 401(k) flows into index funds keep fueling large-cap concentration and support equity markets absent a recession.
- Bassman sees flows reversing only when unemployment rises materially and retirees draw down savings.