Short-end bonds preferred amid energy uncertainty (with Tom Mackenzie; Guy Johnson; Anna Edwards)

5/11/2026 2:37:40 PM	short term up	6 days later	+3.59%	+3.59%
1/6/2026 9:29:46 AM	medium term sharp up	20 days later	+2.05%	+3.08%
12/19/2025 12:53:09 PM	long term cautious up	60 days later	-1.99%	-1.00%
12/8/2025 2:37:40 PM	medium term cautious up	20 days later	-1.67%	-0.84%

Asks if bond markets give a clearer read on risk around energy and inflation.

Tom Mackenzie

Laureline Renaud-Chatelain

AI investment is short-term inflationary, pushing up chip and import prices. Short-term inflation expectations in the US are still higher than the long end.

PCE data showed information technology inflation ballooning; Fed members concerned about AI being inflationary in the short term.

Asks where along the yield curve is attractive.

Tom Mackenzie

Laureline Renaud-Chatelain

Prefers the short-term part of the curve in both credit and sovereigns. There is room for repricing if the Strait of Hormuz reopens and oil flow normalizes.

Short-term inflation expectations have moderated, especially in Europe last week.

Asks if she senses a harder ECB line on fighting inflation.

Anna Edwards

Laureline Renaud-Chatelain

ECB speakers hold the line that an insurance hike in June is necessary. Market expects two hikes, Pictet expects only one, as economic growth will moderate and wage growth is not a concern.

ECB President Lagarde speaking this week; market moving towards expectation of a June hike.

Asks how AI spending in the US will feed into Europe.

Anna Edwards

Laureline Renaud-Chatelain

In Europe, AI is not yet a story. Focus is on energy impact and second-round effects on output prices and manufacturing. ECB is concerned about input prices feeding into consumer prices.

Europe is not yet building massive data centers, though France could be an exception.

Asks if she will buy the front end only when the Strait of Hormuz opens, waiting for certainty.

Guy Johnson

Laureline Renaud-Chatelain

Short end offers good carry without too much duration risk. They have started building positions in high-quality credit. For longer-dated bonds, they want more clarity on the Strait of Hormuz first.

They are overweight liquidity to keep cash for opportunities.

Asks how another upside payroll surprise would affect Fed pricing.

Guy Johnson

Laureline Renaud-Chatelain

Market has shifted to pricing some risk of hikes. One hike is fully priced by March next year. A strong payroll could shift narrative to pricing a full rate hike for this year.

Fed members have not turned very hawkish yet due to unemployment narrative, but that could shift.

Asks about the ability of the market to absorb additional corporate credit issuance.

Tom Mackenzie

Laureline Renaud-Chatelain

Ability is great. Spreads are tight, all issues are oversubscribed. The share of hyperscalers in the USIG index is very small, so investors want to build exposure.

Banks are the largest issuers in the USIG space.

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