Apollo Chief Economist on inflation, yields, and supply pressures (with Scarlet Fu, Mike McKee)

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Torsten Slok 9.0

Apollo Chief Economist on inflation, yields, and supply pressures (with Scarlet Fu, Mike McKee)

yields

That does bring the risk that there is some upside pressure on rates. That's in the front of the long end... also the level of yields in rates is also under upward pressure because of the supply being so significant. Massive $14T supply of investment-grade bonds (Treasury refinancing + deficit + corporate) hitting the market, combined with inflation pressures from tariffs and oil.

10 calls

no reliable edge (random outcomes)

3/27/2026 7:30:29 PM	medium term up	21 days later	-2.12%	-2.12%
12/23/2025 11:03:06 PM	long term up	61 days later	-2.59%	-2.59%
10/28/2025 5:15:14 PM	medium term cautious up	20 days later	+1.60%	+0.80%
10/13/2025 6:26:53 PM	medium term cautious up	20 days later	+2.09%	+1.04%
10/9/2025 2:13:08 AM	medium term sharp up	20 days later	+1.04%	+1.56%
8/29/2025 2:18:36 PM	short term sharp down	6 days later	-5.40%	+8.10%
8/15/2025 11:30:11 PM	medium term cautious down	21 days later	-6.80%	+3.40%

Show all 7 yields results

Asks about inflation expectations and whether it's time to worry when all indicators point in the same direction.

Scarlet Fu
Torsten Slok

Headline inflation is showing signs due to food and energy, but core inflation expectations are stable. Long-term expectations are well-anchored and some are even going down.

Notes divergence between consumer sentiment (down) and actual spending (still strong). The duration of the shock hasn't been long enough to create demand destruction.
Asks if the Fed has wiped out rate cuts for the year, given economists still forecast two cuts despite higher inflation.

Mike McKee
Torsten Slok

The Bloomberg survey shows a bifurcated distribution: either worry about higher inflation for extended periods or worry about a hard landing. This is the Fed's problem - weighing inflation against potential labor market deterioration.

Recession probability in the survey went up from 25% to 30%.
Asks about the labor market (low claims) and what data would signal Fed relief is coming.

Scarlet Fu
Torsten Slok

Next Friday's jobs report is critical. The labor market data is taking a more prominent role because inflation says hike, but the labor market might show cooling, especially with immigration restrictions weighing on payrolls.

So far it's been easy for the Fed to revise up inflation and GDP, but labor market softness would be challenging.
Challenges Slok's chart forecasting a short-term bond market disturbance and 50 years of Middle East security keeping oil prices down, calling it a bold time forecast.

Mike McKee
Torsten Slok

Argues investors should take a long-term view. The current situation is not sustainable for several years or even months. Expect a resolution, with political considerations from the midterm elections. Conclusion will likely be more stability and connection between GCC, US, and Europe.
Asks about his chart showing $14 trillion in investment-grade supply and the demand dynamics.

Scarlet Fu
Torsten Slok

$10T in Treasury refinancing, $2T budget deficit, $2T corporate IG issuance = $14T (~50% of GDP) supply hitting markets. This creates upside pressure on rates and credit spreads.

If oil prices come down and the economy slows, you have temporarily higher base rates and spreads, making all-in yields in credit look juicy.

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