Introduces Cooper Howard, Director of Fixed Income Research at Schwab Center for Financial Research, and asks how his team is thinking about the current market morning.
Sam
Cooper Howard
Advises hunkering down and staying close to baseline allocation; taking outsized bets on duration or credit quality is very difficult in this environment.
Cooper Howard
For interest rate markets, we've likely seen the lows on where 10-year Treasuries can go. Expectation is we won't get back down to the 4% level; it will be very difficult to break through that.
References an inflammatory post from the Iranian Parliament Speaker about US Treasuries and asks how such commentary is analyzed with respect to bond drivers.
Sam
Cooper Howard
Breaks down Treasury drivers into inflation expectations, Fed Funds rate, and term premium. The Iran situation translates into higher inflation expectations and raises the term premium.
Asks how Cooper is synthesizing divergent Fed commentary (like Goolsbee's case for cuts) and who he's looking forward to hearing from this week.
Sam
Cooper Howard
Expects an interesting week with diverging Fed views due to potential for higher inflation and economic slowdown, leading to continued market volatility.