Simple framework for when to buy long-term Treasuries:
Are higher rates and rising interest expense forcing deep cuts to Entitlements and Defense?
Yes → Bonds are a buy
No → Bonds are a sell
One of these three is in a bubble: Bonds, the Dollar, or Boomer demographics.
The math is straightforward. If fiscal discipline materializes under rate pressure, duration works. If not, the bond market reprices reality — or the dollar does. Right now, interest expense is climbing fast, but spending cuts remain mostly theoretical. That's the key variable to watch.
Are higher rates and rising interest expense forcing deep cuts to Entitlements and Defense?
Yes → Bonds are a buy
No → Bonds are a sell
One of these three is in a bubble: Bonds, the Dollar, or Boomer demographics.
The math is straightforward. If fiscal discipline materializes under rate pressure, duration works. If not, the bond market reprices reality — or the dollar does. Right now, interest expense is climbing fast, but spending cuts remain mostly theoretical. That's the key variable to watch.
