Bruce Richards on Treasuries, Fed Policy, and Software Stock Risks

Treasury Market Concerns

• ⚠️ Bruce Richards, CEO of Marathon Asset Management, expresses concern over the long bond and the growing US deficit, which is now 7% of GDP, adding approximately $2 trillion to the debt annually.
• 📉 Foreign ownership of US treasuries, currently at 30%, could decrease due to trade policies, potentially alarming the market given the $10 trillion in treasuries needing to be rolled over and refinanced in the next year.
• 📊 The duration of the 30-year Treasury (18 years) means a 100 basis point rate increase could cause an 18% price drop, leading macro funds to short the long end as the Fed is not buying treasuries.

Federal Reserve and Inflation Outlook

• 📌 The Federal Reserve is expected to hold rates steady for an extended period, despite easing by the ECB, Bank of England, and Bank of Canada, anticipating higher inflation later in the year as tariffs take effect.
• 📈 Inflation is currently well-behaved at 2.1%, but the PCE number is projected to rise to a 2.8% to 3.2% range, which is considered a reasonable increase.
• 🏘️ Higher rates across the curve create a