106. Bond Yields Spike, Markets Wobble, and Why We’re Still Cautiously Optimistic

A lot can change in a month. Since Richard last caught up with Brian’s colleague Kam, half the companies in the S&P 500 have slipped into bear market territory, the IPO market has started to wobble, and the bond market has delivered one of its sharpest moves in years.

Richard and Brian Dunhill unpack what’s behind the recent spike in US Treasury yields, and why it has them looking at fixed income very differently. With US government debt at $40 trillion and around $2 trillion a year going on interest alone, is this the US’s Liz Truss moment, or a once-in-a-cycle opportunity?

 They also dig into where the real strength in markets is coming from. Earnings growth is on track for close to 30% this year, well ahead of the 19% expected in January, but with so much of it driven by AI companies taking on debt, both agree the risks are building beneath the surface.

Brian explains how he is repositioning bond allocations, why he is staying away from AI-heavy corporate debt, and why he is looking at emerging market bonds and preferred instead. He also explains why he isn’t hedging back to the dollar, which he believes is overvalued and due a correction.

Along the way, the conversation turns to tax and politics, including capital gains and indexing cost basis, the Dutch wealth tax system, whether the UK will ever rejoin the EU, the US midterms, and the elections and unrest shaping markets abroad. There are also detours to a Jamie Carragher shrine in a New York pub and the great James Bond debate.

Richard remains cautiously optimistic, Brian is simply optimistic, and on one thing they both agree.. it’s time to take a close look at your bonds!

 

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