Do Hyperscalers Break Duration Hedges?
This rodent tries to 'red team' his antipathy towards bonds. The 🐿️'s 'Monday' Morning Notes. Year 4; Week 30 of 2026.
I promise that this is not a lengthy post-mortem about last week’s Fed meeting - but we do need to talk about bonds (and if the 🐿️ needs to get over some biases).
When my friend Kevin Muir - a long-time “bond Grizzly” - is sniffing an opportunity in long duration fixed (on the long side!) at the same time that Hoisington Asset Management’s Lacy Hunt - a four-decade bond bull - calls time on the trade of his career, the 🐿️ goes on high alert. It’s ‘disturbance in the Force’ time.
Contrarianism is tempting but often costly - and by the way I am not accusing Kev of being contrarian for the sake of it! Regular readers know that I have long excluded bonds from my long book - and I blame the other Rupert! I am just more used to sharing Kev’s point of view on this topic.
However, markets have a way of punishing certainty and it certainly feels to me that bond bearishness is no longer a niche pastime.
Smart folk are changing their minds on the bond trade (even if it’s is two-way traffic!). It’s time to ‘red team’ what I label as my ‘passive-aggressive disinterest’ in owning long bonds.
Can long-duration Treasuries still be trusted as portfolio insurance in a world of emerging fiscal dominance and hyperscaler-driven duration supply? What’s new since my 60/40 piece from almost three years ago? Under what conditions should I own duration or should I just continue treating long bonds as a trade?
The Regime Debate
