Fixed income outlook and Fed leadership speculation (with Joumanna)

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NDX

RUT

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Columbia Business School 2.0
Business School
Ed Al-Hussain 7.5

Fixed income outlook and Fed leadership speculation (with Joumanna)

yields

There's a really decent chance that that rating rate shifts down to perhaps three to half to four percent this year. From 4-4.5% range last year to 3.5-4% this year indicates downward pressure on yields.

Where do US Treasuries sit amid safe haven flows to gold and silver?

Joumanna
Ed Al-Hussain

Treasury yield income potential is still very attractive, particularly on the longer part of the curve, with foreign investors becoming more comfortable hedging dollar risk but holding US interest rate exposure.

Given how rich valuations are elsewhere in risk assets.
How would potential Fed leadership changes (Hassett/Warsh) influence monetary policy?

Joumanna
Ed Al-Hussain

It's extremely difficult to gauge how leadership change would reshape the board, and there's a real possibility neither Kevin makes it due to Senate pushback to protect Fed independence.

Christopher Waller is a fantastic candidate with credibility in markets, and his stock has gone up.
Does benign CPI data set stage for more dovish Fed than priced?

Joumanna
Ed Al-Hussain

Not yet - the Fed is comfortable waiting for more data to confirm if the rapid decline in inflation is real, and tariff pass-through has been minimal.

Unemployment went up faster than expected and inflation came down faster than expected, but we don't know to what extent this was polluted by absence of data.
What's your value view on 10-year Treasuries?

Joumanna
Ed Al-Hussain

There's a decent chance the rate shifts down to perhaps 3.5-4% this year from 4-4.5% last year.
What about fiscal dominance narrative in US vs other countries?

Joumanna
Ed Al-Hussain

There's divergence building - US fiscal shock was function of election outcome and already priced, while deficits are deteriorating in Japan and Germany but stable in US.

Yields rose into end of 2024 pricing in premium, but fiscal picture in 2025 hasn't materially changed.

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