BOND - Is Now A Good Time To Consider Treasury Savings Bonds? Only If Inflation Is Transient

• We have a couple of themes at work: inflation, rate hikes in order to combat inflation, and the negative economic impacts of both.
• These factors have meant that the yield curve is flattening, with short term rates rising faster than long term, with higher rates meaning bond demand is falling.
• We think that fixed rate instruments of any kind are not interesting almost ever, but with inflation of uncertain duration there is no reason to add risk for 2% returns.
• The only reason to consider bonds is if you believe, as we do, that inflation is primarily supply side. But even then, there are so many better ways to play a transient inflation thesis with equities.

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