Episode summary
Rates need to stabilize for stocks to move higher again, says Greg Fleming
Summary
Greg Fleming argued that the sharp move in Treasury yields may be the bond market starting to find a new equilibrium after a rapid reset, not just a one-way selloff. He said the rise in yields reflected a mix of hotter inflation, deficit concerns and still-solid economic growth, while the pullback could also reflect trade unwinding and a rush to safety. Fleming said it is still early, but he sees signs rates may be settling into a range rather than continuing higher.
He said stocks need rates to stabilize before the market can broaden out beyond the narrow group of AI winners that have driven much of the advance. Citing market breadth weakness, he said many stocks are already well below their highs and that a steadier 10-year yield could help other sectors participate. If the 10-year settles around 5%, he thinks businesses would be fine and some of the pressure on weaker parts of the economy could ease.
On the policy and fiscal side, Fleming said the deficit remains his biggest concern and that he would rather see the rate of deficit growth come down than expect immediate budget surpluses. He said the U.S. may be able to manage elevated debt only if productivity improves, potentially helped by AI, and if the economy can sustain stronger growth without extra inflation.
Key takeaways
- Greg Fleming said the 10-year Treasury’s sharp swing may reflect the bond market trying to find a stable new range after a rapid reset.
- He sees 4.5% to 5.25% on the 10-year as a more likely settling zone than 5.0% to 5.45%, assuming AI-driven productivity and weaker housing.
- Fleming said stocks need rates to stabilize for the market to broaden beyond a narrow AI-led group.
- He said the deficit is his biggest concern, but he mainly wants the deficit’s growth rate to slow rather than for immediate surpluses.
- He said a 10-year yield around 5% would likely be manageable for businesses and could help weaker sectors recover.
Notable quotes
“I THINK IN ORDER TO BROADEN THE GROUP OF STOCKS THAT ARE DOING WELL AND MAYBE HAVE ANOTHER KICK HIGHER HERE ON THE EQUITY NEED RATES TO SETTLE”
“I'M MORE IN THE FOUR AND A HALF TO FIVE AND A QUARTER THAN FIVE AND A 5:45”
“IT REMAINS MY BIGGEST CONCERN, BUT THAT WOULD BE A GREAT PLACE FOR IT TO SETTLE”
How the episode opens
A lot. Yeah. Or we just.
Think we do too. And I scratch my. I do like the method acting.
The. The fed target and our policy needs to address that. Join us now.
Greg Fleming, president and ceo of Rockefeller Capital Management, former president of morgan stanley wealth management. I don't think I was at merrill when you were there, but you were a big, big, big swinging person at at merrill and had and had sold it, had to sell it. Sadly, it was a good time to sell my friend.
It was a good time to sell, but as you know, it was a great company and shouldn't have had to be sold. — I. You're preaching to the choir. I'm still, I think, trained at mother mary. — You were there?
Exactly. Part of the thundering herd. Yeah. Was at olpae. And and I loved it, I really did. That was weird yesterday. Did you see the can you explain the action in the ten year and what you think that indicated.
You know, one of the great things about the action in the ten year is that we've been at this for so long, I mean, coming up on four decades. And that was surprising to see, right? — Yeah. Even though it's not that many bases, we used to have much bigger moves that we were talking about. But to go from 535 to 508 and just after rushing up to 535, oh, wait a second. And then rushing back.
Well, in the rushing up is what you'd expect with the hotter, you know, inflation number. And then maybe, you know, the bond market takes a look at it and says, you know, maybe the ai trade is going to come off enough that the economy is going to cool.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- rates stabilization
- treasury yields
- economy outlook
- deficit reduction
- stock market direction
Companies and tickers mentioned
- Rockefeller Capital Management
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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