Joseph Wang breaks down a quiet but telling week in markets, why he loaded up on 30-year bonds, and what the data is quietly signaling about where the economy is heading.
Key Points
Key Highlights:
- GDP came in at 1.6% for Q1, down from the initial 2% estimate, with no meaningful boost from the AI buildout that many expected
- The personal savings rate is dropping fast, driven by two very different forces, a wealth effect at the top and rising energy costs squeezing everyone else
- PCE inflation is now running at 4%, double the Fed's 2% target, with more Fed officials openly comfortable holding rates higher for longer
- 30-year bond yields are rising globally due to a simple supply and demand mismatch, too many bonds being issued and fewer pension funds needing to buy them
- Decades of disinflation from China joining the WTO and women entering the workforce are structural tailwinds that are now fading
- Aging demographics are actually inflationary, not deflationary, because retirees spend savings on real goods while fewer workers produce them
Takeaway At 5% yield, the 30-year bond offers both income and a potential hedge if the equity bubble bursts and rate cuts follow. Joseph is not trying to predict inflation 30 years out, he is simply buying an asset that pays well and gets more valuable if things break.
