

Bonds Are Not Vegetables Says HSBC’s Steven Major: Macro Matters
5 snips Jul 27, 2024
Steven Major, HSBC’s global head of fixed-income research, joins Bloomberg Intelligence strategists Ira Jersey and Will Hoffman to delve into the complexities of bond markets. They discuss the determinants of long-term interest rates and how supply influences yields. Regulatory constraints on dealer-intermediation are examined, alongside a contrarian outlook for global bonds. The conversation emphasizes the need for intellectual honesty in economic research while exploring the shifting dynamics between goods and services consumption.
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Global Growth Dynamics
- Global growth is sluggish outside the US, with China intentionally slowing and Europe facing challenges.
- The US economy remains robust due to fiscal stimulus, migration, and tech excitement.
Service Inflation and Migration
- Services inflation was a key Fed concern, driven by pandemic disruptions and labor market adjustments.
- Migration contributes to disinflation by increasing the labor supply and potentially lowering wages.
Equilibrium Rates and Valuation
- Determining equilibrium rates is crucial for valuing fixed income securities, considering the path of policy rates.
- It involves assessing factors such as demographics, productivity, debt, and global interactions.