The Fed's Balance Sheet Plans Are Kryptonite For Risk Assets | Andy Constan

Bullish:

• $SHORTTERMRATES - Andy is heavily invested in short-term interest rate futures, which he describes as conceptually similar to a leveraged position in a two-year note. This position is based on his expectations for the path of interest rates.

  • “My principal risk right now is long, what what are called silver futures, which are short term interest rate, futures tools that allow you to bend on the path of interest rates. Conceptually, it's like owning a levered position in a two year note.”

    Andy·1:04:18

Bearish:

• $SPX - Andy is short equities due to his expectation that interest rate cuts will not be sufficient to stimulate the economy, primarily because inflation hasn't been fully addressed yet.

  • “I'm short equities because I expect that interest rates are gonna get cut, but not enough to really their their price not to be cut at all, but not enough to stimulate the economy until equities fall, primarily because inflation isn't beaten yet.”

    Andy·1:05:09
• $TREASURIES - Andy anticipates a significant increase in the term premium of longer-dated bonds as the market works through the current overhang.

  • “I think there's gonna be a mean a meaningful widening or steepening or increase in the term premium of longer dated, bonds as the overhang gets worked through.”

    Andy·45:47