Late Cycle Bond Trades | Mark Cabana on Mild Recession Case and Treasury Market Supply

Mark Cabana, head of US Rates Strategy at BofA Global Research, joins Forward Guidance to share insights on today’s very strange bond market. Cabana, a former officer at the Markets Group at the Federal Reserve Bank of New York, explains his bullish case for the 10-year U.S. Treasury yield, which he expects to fall modestly as the Federal Reserve rate-hiking cycle approaches an end. Cabana also discusses the U.S. Treasury’s renewed issuance of Treasury bills as well as the SEC’s new ruling on money markets. Filmed on July 18, 2023.

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Timecodes:

(00:00) Introduction

(00:29) This Is A Very Strange Bond Market

(05:59) Funding Pressures For Banks Have Eased, Looking At Federal Home Loan Bank (FHLB) Issuance Data

(14:38) Migration Of Deposits Into Money Market Funds (MMFs) Has Slowed

(23:00) Who's Going To Buy The Bonds?

(31:51) Deep Dive on Treasury Bond Yields

(34:29) Why (And When) Will The Federal Reserve Cut Interest Rates?

(42:47) Will Quantitative Tightening (QT) Continue For A Long Time?

(46:32) 10-Year Treasury Is Very Clean Expression Of End-Of-Cycle Trade

(49:54) SEC's New Rule For Money Market Funds

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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.