Why The 30-Year Treasury Lost Its Biggest Buyers | David Busch on Why High Yields Are Attractive Right Now – Monetary Matters with Jack Farley

Why The 30-Year Treasury Lost Its Biggest Buyers | David Busch on Why High Yields Are Attractive Right Now – Monetary Matters with Jack Farley — Transcript

Market views

Bullish

EQUITIES— Equity markets can continue rising alongside higher yields as long as corporate earnings (especially from AI infrastructure buildout) continue to support valuations. The focus has shifted from passive investing to fundamentals-driven investing.
UST— Treasuries in the 3-7 year range are attractive as a portfolio diversification tool at current higher yields, with a positively sloping curve enabling roll-down strategies. They can serve as a natural offset to equity risk.
INTU— Intuit and similar software companies sold off excessively on AI disruption fears. Most Americans won't use AI to replace professional tax/estate planning software, and these companies will benefit from AI-driven efficiency improvements instead.
AIINFRA— AI infrastructure buildout requires an all-hands-on-deck approach across materials, industrials, utilities, and energy. Large tech companies show no signs of slowing capex despite higher rates, driven by bullish long-term AI outlook.
NUCLEAR— Small nuclear reactors are an underdeveloped area in the US that can help power AI data centers. This sector is positioned to benefit from the massive energy requirements of AI infrastructure.
RAREEARTH— Rare earth mineral sourcing and recycling companies are positioned to benefit as the US needs to reduce dependence on China (which controls 80% of supply) for AI infrastructure buildout.

Bearish

LEVERAGE— Leveraged sectors including financials, insurance, banks, and REITs are most susceptible to the current elevated rate environment and may experience elevated volatility due to margin compression from higher borrowing costs.
PRIVATECREDIT— Private credit funds carry significant credit and liquidity risks that are often understated. They represent institutional exit liquidity being marketed to retail, with gated redemptions and opaque loan tapes creating vulnerability.

Not investment advice.

Mentioned

Market views