The "Right" Price for Bonds, Demographics and Inflation, and Cheap Bets on Volatility

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With bonds selling off alongside equities and the volatility of both asset classes rising, there is perhaps no better time to hear from The Convexity Maven himself, Harley Bassman. In this interview with Logica Capital Advisors partner, chief strategist, and PM Mike Green, Bassman outlines his view that this move higher in rates is the bond market finally moving towards the “right” price after a decade of interest rate suppression. Green and Bassman discuss the positive and negative consequences of higher rates, a steeper yield curve, and monetary and fiscal policies like negative interest rates and stimulus checks. They also touch on the current opportunities that Bassman sees and his prediction of inflationary impulse due to demographics sometime between 2023 and 2025. Harley Bassman has provided a slide deck to accompany this interview which can be found here: https://rvtv.io/3cai4CR and his commentary on convexity can be found here: https://rvtv.io/38eiXZS. Filmed on March 3, 2021. Key Learnings: Bassman believes interest rates have been kept artificially low, and the current sell-off in bonds is the market moving towards the “right” price. He also advocates for investors to be long convexity and believes that OTM calls on equities and long-dated options on interest rates are extremely cheap.

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The “Right” Price for Bonds, Demographics and Inflation, and Cheap Bets on Volatility
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For the transcript visit: https://rvtv.io/TheInterview

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What a revolution in publicly available information- Guys this smart, who focus on the right issues and nail the dynamics of the market for free…

Tob Ias says:

Where can I find the slide deck?

jcgreader says:

I keep seeing "BERKELEY" in the Real Vision background. LOL

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Shane Empey, PE says:

Mike, If the gains are in the German currency increasing in value over the US currency, then why buy the negative yield German bond? Why not just sit on the German currency at an effective zero bond yield?

Lane Bulger says:

He ask the question that maybe the banking system doesn't have bad guys in it? Are you serious

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hedge hog says:

Negative rates is a failed experiment and even though we know it doesn’t work the Swedish central bank is threatening to go back there^^ Just shows me, either that the central bankers are the definition of insanity or that it’s all made to force people to spend^^

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