Episode summary
We Asked David Rosenberg Why He Wants the Bonds Everyone Hates — and Where He's Hiding in Stocks
Excess Returns
· · 1 hr 1 min · Hosts: Matt Zeigler · Guests: David Rosenberg
Summary
David Rosenberg argues that the market has priced in too much Fed tightening and that Treasury bonds are set up for a strong re-entry point. He says the move in yields has been driven mostly by real rates and term premium, not by broad-based inflation, and he expects slower growth, decelerating wages, and weaker real consumer spending into 2027. He also sees the Treasury’s issuance mix and post-election fiscal gridlock as potential supports for bonds.
On inflation, Rosenberg says higher oil prices act like an exogenous tax on consumers, but he does not see wage, housing, or monetary inflation validating a sustained upside move in prices. He thinks the consumer has been holding up through a falling savings rate, credit card usage, and the equity wealth effect, but that setup weakens if stocks wobble and income growth stays soft.
On equities, Rosenberg is cautious on the S&P 500 because of concentration risk around AI and mega-cap tech. He says utilities, industrials, and even consumer discretionary have become linked to the AI trade, leaving healthcare and consumer staples as the main places to hide. His portfolio stays diversified, with a meaningful bond allocation, cash, commodities, gold, and exposure to Europe and Asia.
Key takeaways
- Rosenberg says Treasury bonds are cheap because the market has priced in too much Fed tightening and too much inflation risk.
- He argues that recent inflation pressure is mostly an oil shock and uncertainty premium, not durable wage-led or housing-led inflation.
- He thinks consumer spending has been propped up by a lower savings rate and the equity wealth effect, which could fade if stocks weaken.
- He warns that U.S. equity risk is unusually concentrated in AI-linked mega caps, with only healthcare and consumer staples offering much refuge.
- He is bearish on the U.S. dollar and likes gold as a reserve-rotation and real-rate hedge.
- His model portfolio is positioned defensively with 50% equities, 30% bonds, 10% cash, and 10% commodities.
Notable quotes
“I think that if those dot plots don't move today or they don't move that much, I think that you can get a nice bull steepener”
“I don't think that it's not a big inflation story. It's funny because everybody talks about inflation”
“I'm avoiding the SP500 as an index”
How the episode opens
Excess Returns, the channel that makes complex investing ideas simple enough to actually use where better questions lead to better decisions. He's now Rosie the riveting ETFer, at least on the TSX. It's David Rosenberg. Welcome back, David. — Thanks, Matt. Uh, appreciate you inviting me.
So, what we're not exactly talking about today is new new ticker ROSY available on the TSX. That's some of David Rosenberg and Rosenberg research's best ideas expressed. It's only on the TSX.
Talk to your adviser about that. But it's all built off of this model portfolio and the way that David's written about allocating assets for all these years. So that's really what we're going to dive into here.
David, you ready to take a top down view of some of the crazy stuff? Markets are a little wild right now, I think. What's What are you What are you watching this week?
We're coming into the Fed meeting. This is the 16th of September, 2026, early in the day. Well, this is where I I think that uh we could probably get um a very nice re-entry point into the uh beaten down and maligned and detested Treasury market.
Um, and I say that because uh the expectations in the market for the Fed, and I'm taking my life in my hands because this is before uh the FOMC meeting. Uh but you remember just in March, and this was already um after the war started, uh the dot plots. Now, now I got to say that I've always thought the dot plots were a bit of a joke.
Um but the markets look at it and the fact that you know u Kevin Worsh uh doesn't like to give guidance. Uh he does uh do body language and tone because it seems like whenever he opens his mouth the 10-year Treasury note yield manages to go up six basis points.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- treasury bonds bullish case
- fed policy
- inflation and growth slowing
- ai stock market risk
- portfolio allocation
Companies and tickers mentioned
- Rosenberg Research
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from Excess Returns
-
We Asked Fidelity’s Director of Global Macro Who Wins If AI Spending Slows -
An AI Bubble Could Hit Stocks. Inflation Could Hit Bonds. How Do You Diversify and Keep Both? -
Tech Is Priced for a Boom. 86% of the Economy Grew 0.7%. What If AI Slows? -
Tech Is the Cheapest Since 2022. Walmart Is 46 Times Earnings. Where Is the Bubble? -
This $1.5 Trillion Manager Expects More Fed Hikes. So Why Is He Still Bullish? -
AI Stocks Cracked. Margins Could Be Peaking. So Why Is a Liquidity Expert Watching the Debt Wall?
Excess Returns, this episode and its artwork belong to Excess Returns. Octagon is not affiliated with the show; this page is an independent summary.
