Treasury yields (^FVX, ^TNX, ^TYX) further recent declines as the rally fueled by Donald Trump’s election win cools off. Wells Fargo Investment Institute head of global fixed-income strategy Brian Rehling joins Catalysts Host Seana Smith to discuss the bond market moves. Rehling says the move in the treasury market “makes sense,” explaining, “We’ve seen the trend of higher yields even before the election as markets kind of anticipated the outcome. And then, of course, the reaction after [since] many of the president-elect Trump’s policies are somewhat inflationary. When you talk about tariffs, you talk about further tax cuts, et cetera. And so that’s got the bond market a little nervous. But again, I think you also have to contrast that with the fact that one of the major items he ran on was to keep inflation down or bring inflation down. We’ll see how those somewhat conflicting messages end up being implemented over time.” The strategist says, “We’re taking advantage of the backup in yields … The sector we like the most would be intermediate fixed-income. I think it makes sense to take a little duration, move out a little bit, take advantage of the yield curve steepening, [and] take advantage of the higher yields. You know I wouldn’t get too far over my skis on long-term fixed-income, though, until we have a better idea of exactly what policies might be put into place and how it could impact inflation and the bond market.” For more on how the strategist is playing the fixed-income market, watch the video above.
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