美债收益率创逾20年新高，市场定价年内加息三次

On Thursday, yields on the longest dated US bonds rose to the highest level in more than two decades. Bond volatility has left traders unwilling in some cases to make riskier bets with concerns about high inflation and government spending running rife. Financial markets are now pricing at least three Fed rate hikes over the next year. For more on this, we're joined by Barry Ritholtz, founder of Ritholtz Wealth Management, of course, the host of Masters in Business.

Barry, great to see you once again. Let's start with the bond market. We'll get to stocks here in in just a minute. But when you look at the moves that we've seen, what what are they telling you? It just a few weeks back, there was kind of wider concern about how they're reflecting the state of the fiscal house, that The US has. How how do you read what's happening here? I'm not sure. Barry, can you hear us okay? Hear audio.

Alright. We'll fix that and get back to Barry in just a second. You know I do love talking about bonds. Thank you. Very much so. And I can tease that there's more of it coming up here later in the show. Maybe as we wait for Barry, we can go back to what we're talking about there. Alexis was talking about a moment ago, which is this conversation about AI and Bill Gates' sobering comments about humanity. You've been a lot of events on the sidelines of the UN this week.

I have as well. I was really struck by how much this did rise to the floor. This was something that a lot of folks were talking about even as it was taking place in DC as well. It really did. Even, like, you know, casual coffees and off the record conversations, you know, you talk about the news of the day, and then everyone was talking about Iran. Think because, you know, all these officials are, most of them are parents, and they're really concerned about what this means for next generations to a point where, like, they're talking about it in a policy standpoint.

I feel like that has happened very quickly in the last couple months. This has come to the forefront. Believe we have Barry Ritholtz back with us. Barry, was asking you before just sort of how you read the moves in the the bond market. If it's, you know, about growth, as Beth Hammack said, if it's about the prospect of growth, if it's about what the Fed's gonna do here, if it's about concern about the American fiscal house.

How do you read what we're seeing here in the thirty year, the long end in particular? Sure. What what makes this so confusing to people is that there are several things that are somewhat contradictory happening at once. So when we had rates from the Fed at zero, when we had, gee, two almost 2.5 of of QE and ZERP, that's an abnormality. And what we're seeing since 2022, since rates began to normalize, is just simply going back to pre financial crisis levels.

So you go to the eighties and nineties, 7% mortgages and four and a half, 5% tenure was not aberrational. At the same time, there have been a series of, the most polite way I could describe it is self inflicted policy decisions. So tariffs are inflationary. War in The Middle East driving oil and diesel prices higher is inflationary. And all of that is combining with this normalization to not only make yields much, much higher, but just to do it so rapidly.

And so you have those two things happening at once, normalization and a series of policy factors that are driving, inflation and yields higher. That's that's why people are having a hard time wrapping their heads around it unless you're a yield investor, in which case, hey. You're finally getting paid to sit in fixed income. Okay. I am not even long time, I should say Yeah. Since they've had that that moment to, to embrace.

Well, that's what I was gonna ask. I mean, if people are used to this abnormal, almost artificially cheap credit and you have structured your investing or your business investments around that, how do you cope with this sudden spike in borrowing costs? How is it impacting businesses on on the front and the back end? Sure. So there's a couple of of approaches starting from the least aggressive to most aggressive. To to to begin with, you know, after 2022 and and looking at at bond prices today, you should be a little more comfortable with a little more duration.

That's the easiest thing you could do. Go from five year average duration of bond portfolio to six and a half, seven, seven and a half. Secondly, because we've enjoyed not only four consecutive years of double digit equity growth, but really fifteen years of plus 15% a year, every time I look at a new portfolio, the many Americans are wildly overweighted in equity, which has been fantastic, especially during the past four years.

But if you're a traditional sixty forty or seventy thirty portfolio allocator and you look at your holdings and that has ballooned up to seventy seven thirty three or pick your favorite eighty twenty, pick pick whatever that allocation has moved out of whack, Well, the simple thing to do is to just rebalance, reweight back to where you were. And then if this is truly higher for longer and you're starting to concerned, be get concerned about the amount of risk in your portfolio, well, modest shifts, seventy five twenty five down to seventy thirty, along those weight lines on an allocation level makes sense for people, especially if you're older, if you're close to retirement, if you're really not making a panic decision about risk, but working with just the facts of your particular situation.

Barry, help us navigate the the market psychology surrounding AI today and and over the last week. So we had met, of course, doing very well with the announcement of this this new device. At the same time, we've seen a lot of companies building data centers, pausing their IPOs, scaling back, kind of reflecting some of the nervousness that we've seen about AI more more broadly. What is your sense of sort of where things stand as as we're just talking about a moment ago?

There is this kind of broader conversation happening, yes, among executives and world leaders, the rest of us about sort of what this is gonna what this is gonna notionally do here for the world going forward. Yeah. So, first, it's it's a tremendous technology when deployed correctly. And, you know, unfortunately, I see a lot of people using it kinda transactionally substituting for search as opposed to collaboratively.

Hey. I don't wanna read this whole five volume set of books. Can you show me the best, data points within? And and now I'm gonna use that as the basis for further research. One of the ways I use it. So so it this constantly seems to get compared to the .coms. Mhmm. It it's nothing like the .coms, not only because of the revenue and profit picture. I think this is much more akin to the industrial revolution. It's gonna be that significant.

Now all that said, every time we have a new technology, it doesn't matter. Start you could go back to railroads or fiber optics in in the nineties or really everything in between, there's always a massive overallocation of capital as people try and choose the winners. And we know what happens. There will be winners. There will be losers. Whoever is a big winner today may not be a big winner tomorrow. Meta was a giant laggard, for a while.

Remember their whole, foray? The reason they even changed the name into Meta was right. Right. And that didn't work out. Forgot about the Metaverse, to be honest. I mean, it's literally in their name and their stock symbol, but you never know who the next great product company idea is gonna pop up. So what is Meta? Up 30% for the month, 11% for the week. It's the top of the Apple, App Store downloads. Yep. So so the the fascinating thing there is good for Meta.

The question is, who's the next company that's gonna pop up with this? Yep. How much staying power do they have here?