Bond Markets Hit by Oil Shock

Yields cautious down , medium term, interviewee explicit

explicit

NDX up , medium term, interviewee implicit

implicit

RUT up

Oil cautious up , short term, interviewee implicit

implicit

Metals

USD

Bank of America 8.5
Investment Bank $3040.00B
Matthew Diczok 9.0

Bond Markets Hit by Oil Shock

ndx

Overweight US equities recommendation, positive view on AI-driven productivity boom (1990s parallel), and structural advantages of the US economy all imply a positive outlook for US growth stocks represented by NDX.

wti

Acknowledges near-term spike ('first month contracts almost doubled') but argues the market sees it as temporary ('12 month is only up 10 to 15 dollars'). This implies a short-term rise but not a sustained bull market.

yields

Our belief for now is that you'll probably going to get another two cuts this year... We expect him to at least try and deliver one rate cut before the midterm elections. The call for rate cuts is based on addressing a slow-growth job market and the view that AI will be disinflationary (1990s parallel). The Fed has room to cut as the economy does fine at 3% inflation.

14 calls

+0

no reliable edge (random outcomes)

3/19/2026 9:36:59 PM	medium term cautious down	20 days later	-2.23%	+1.12%
2/17/2026 12:42:30 PM	short term cautious down	5 days later	-1.23%	+0.61%
12/5/2025 12:40:03 PM	medium term cautious down	21 days later	-1.34%	+0.67%
11/13/2025 8:45:37 PM	medium term cautious down	20 days later	-0.96%	+0.48%
10/29/2025 1:10:31 PM	short term cautious down	5 days later	-0.10%	+0.05%
10/15/2025 6:53:52 PM	medium term cautious down	20 days later	+4.55%	-2.28%
9/18/2025 10:17:17 AM	short term cautious down	5 days later	+0.19%	-0.10%
9/17/2025 6:36:22 PM	short term cautious up	5 days later	+0.39%	+0.19%
9/17/2025 4:38:45 PM	medium term cautious down	20 days later	+0.61%	-0.30%
9/5/2025 10:40:41 PM	medium term cautious down	21 days later	+2.35%	-1.17%
9/3/2025 5:31:38 PM	medium term sharp down	20 days later	-0.69%	+1.04%
8/26/2025 11:54:24 PM	short term cautious down	6 days later	+0.92%	-0.46%
8/14/2025 9:14:07 PM	short term cautious down	5 days later	-0.74%	+0.37%

Show all 13 yields results

Are we entering a new era for the global bond trade?

Host
Matthew Diczok

We are not overly concerned about the global bond selloff from a US perspective. US real yields (approaching 2% on 10yr, ~3% on 30yr) look attractive relative to Germany (~0.75%) and Japan (0.35-0.50%).

The US adjusted to higher inflation five years ago. Any further selloff is expected more in other developed markets.
How do you factor in the war and the energy shock? Which view is right: that it's inflationary or that AI is disinflationary?

Host
Matthew Diczok

It's a Rorschach test. The key question is not what the right answer is, but what the Fed Chairman's view is.

A policymaker's view depends on which mandate they prioritize: maximum employment or price stability.
Matthew Diczok

Powell is a professional and is setting up the next Fed chair to be able to position however they want.

He mentioned the possibility of Powell staying on or a new chair like Kevin Warsh being appointed.
Matthew Diczok

This feels a lot like the mid-90s. We had a bond bear market from rate hikes, then a productivity boom from tech.

In 1994, the Fed doubled rates from 3% to 6%, people worried about recession, but Greenspan pivoted and the longest expansion followed.
Matthew Diczok

The 2% inflation target isn't based on US financial history. The economy does fine at 3% inflation.

Nominal GDP, stock market, corporate profits, spending, and income all do fine at 3% inflation. The average inflation rate has been 3.3%.
How would a new Fed chair like Kevin Warsh see the rate path?

Host
Matthew Diczok

Our belief is you'll probably get another two cuts this year. We expect at least one rate cut before the midterm elections (Nov).

Warsh's view is that AI will be productivity-enhancing and disinflationary, similar to the 1990s parallel.
Why do we need a rate cut if things are good?

Host
Matthew Diczok

The slow growth job market is a significant issue that might need a rate cut or two to address.

You really worry about an economy when people start getting fired, not when job growth slows. We're not seeing firings, just slow job growth.
Matthew Diczok

The oil market is saying the energy price spike is not a sustained increase.

First-month contracts almost doubled, but the 12-month is only up $10-15. To create economy-wide inflation, you need sustained higher energy prices AND consumers spending the same on everything else, which isn't happening.
What's your advice to investors?

Host
Matthew Diczok

We are positive on the economy and very positive on the US vs. the rest of the world. We are overweight US equities.

The more dangerous the rest of the world gets, the more the US's unassailable competitive advantages (demographic, geographic, institutional, educational) stand out. We are neutral duration in fixed income but find long munis attractive for high-tax investors.

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