- 00:00Ed, given that to your view, how do you think you play it from here if you don’t think we kind of weren’t more Fed cuts, we’ve obviously got the US election where both candidates are likely to expand the fiscal deficit. You know, do you think this results in an aggressive kind of bear steepening? Is it the long end you play or is it that we’ve got there is still juice in the front end in terms of pricing it, those Fed cuts that are still aggressively priced? Yeah, well, look, I think there’s a lot of uncertainty as we head towards the elections. I mean, we’ve got a couple of major uncertainties that have something to do with politics. There’s geopolitics. We know that the Israelis are going to attack Iran. We just don’t know where or what or when. We also know that an election is about to occur in the United States. And even if we knew whether it was going to be Trump or Harris. We don’t know how Congress will shake out. I think the stock market has to be concerned if we get a sweep by the Democrats or a sweep by the Republicans. I think the stock market has to be concerned if it’s a very, very close and bitterly contested election. So I think the stock market will do best if we basically vote for gridlock, that whoever’s in the White House just doesn’t have an open season to do whatever they want. But they’ll have a very contentious issue with getting through things through Congress, which is, by the way, the way our system was designed. It was designed to have checks and balances. And I’m going to I’m going to push you, put you on the spot. But I know you’re not a man who’s afraid of predictions. But we’re asking today on the Markets Live blog. When will ten year yields reach 5%? So give us your best prediction of the timeline of when we can see ten year yields rise that high. We’re about 4.2% at the moment. When do you think five? So ten year yields can reach 5%? Well, I won’t I won’t say, you know, raise my hand my ante to match your ante. But I think we’ll see four and a half percent probably early next year. 5%, again, will depend a great deal on the election results. I think if we do get a sweep by the Democrats or the Republicans, it almost doesn’t matter here. Either way, we’re going to have wider deficits, more debt accumulating and possibly deflationary consequences, and suddenly the Fed will be backpedaling and that not easing and maybe even talking about raising rates and that kind of situation, I guess we could get to 5% pretty quickly because, you know, the bond market was for a while factoring in several rate cuts by the Fed because the perception was that the economy was weak, the labor market was weak, and inflation was sort of an automatic pilot going to go down to 2%. Now, all of those assumptions seem to have been blown out of the water. And as you mentioned, we have some Fed officials already kind of walking back the idea that there’s going to be a 50 basis point cut at the November meeting or even walking back the idea that we necessarily will have to 25 basis point cuts, one in November, one in December. I think as you mentioned, nine and done is the most likely scenario because the economy is strong, labor markets doing fine and inflation is in fact moderating. But within the inflation numbers, there are some disconcertingly hot areas.
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