Guggenheim：美债收益率5%是买入机会，6%将大量购入

Were just talking with Earl Davis who said he's going to the back of the theater near the exit door talking about how he's looking for ten year treasury yields to go between five and five and a quarter percent and thirty year treasuries to go to 6%, but he still wouldn't buy them. Do you see things the same way? I think that's a very provocative statement. What I would say is is that here we are in a trading range on the ten year.

And at the low end, we've been down into the high threes. At the high end, we're $4.70, $4.75. And at $4.75, that's pretty much the high end of our range. If we see 5% on treasuries on the ten year, I would tell you that is a buying opportunity. I think the markets aren't able, particularly the equity markets aren't really able to function as well beyond that, and I do believe it tightens financial conditions. The thirty year, however, historically has traded much more on inflation concerns.

I don't see us going to 6% on the on the thirty year. And if it does, I would take the opposite view and I'd back up the truck. And I buy a lot of six percent ten thirty year treasuries. I think that at this point in time, what we're also seeing I said stratification earlier. We're seeing that also in the pull up. Another factor that's happening, and that is the sheer amount of debt that's being issued, not just at the treasury level from fiscal spending, but also because of data centers and AI trade the AI trade that's happening at this point in time.

And as a result, we're seeing this very significant amount of need for capital, and they want to issue in the long end, which is pulling rates up. Do you wanna invest in that debt long duration, hyperscaler debt, or do you see that as potentially more toxic than US Government debt should things turn south? I think there are other parts of the infrastructure trade that make a lot more sense, power build out, and other kinds of long term, real asset investing.

My concern about the data center build out and the cost of that is the obsolescence risk in the long term. Now I am selectively an investor in shorter duration offerings, but we have to be thoughtful because the AI offerings that are coming out of the capital market are not in just one place. They are in unsecured investment grade credit. They're in structured credit. They're in infrastructure. So you have to be really thoughtful to make sure that you're getting the right amount of diversification.

There's trillions of dollars of CapEx in this space that is happening over the next several years. And as a result, there's going to be continued need for capital. And I think being thoughtful and layering in, is probably a better way to be investing in this space going forward. And so much of that is investment grade rated debt. Al Davis of BMO, Lisa was talking about the 6% call. The other interesting take he had, he was derisking on the credit side, but dropping all the high yield exposure and then refilling at the front end of of IG.

Where do you think the risk is in credit right now? Because we've had a series of conversations that have raised the question as to whether actually it might be sitting in investment grade and and not in high yield with regards to this story. Well, the high yield market has actually shrunk over the last number of years anyway and has actually moved up in credit quality. It is a very different market than it was, say, ten years ago even.

With regard to the high high level of capital issuance and debt issuance that's happening, particularly in the long end on investment grade to fund this AI build out. And by the way, I'm very positive on the AI technology in the long run, but I am concerned in the near nearer term with regard to the risk that's happening. And simply, again, that that stratification that's happening because there's so much issuance there, that is demanding a higher level of of of coupon.

And for me to get invested, it has to be paying a a lot more, and that makes sense to me as an investor. The risk is elevated, and there is concern. And, of course, we've, you know, we've become much more aware of the fact that these issuers are free free cash flow negative at this point in time, and I think that's something to be concerned about. Whenever you see historically a huge amount of debt issuance, whether it's whether it's the, you know, fiber optic cable build out of the late nineteen nineties or the financial crisis, you know, the lead into the financial crisis where there's so much debt came out, Anytime you see that, you have to sort of say to yourself, I think we need to be thoughtful with regard to this concentration of risk and to be aware that it could have, repercussions to the credit market.