Strategist: bond market is on a 'buyer strike' now in the leadup to Trump's inauguration

Right now, the real issue is more on the guilt side, and that's not really going to necessarily be resolved that easily because it's a sentiment issue. There's a little bit of recency bias where people are remembering the LIS trust event of just a couple of years ago. We don't think this is anything like that, just to be clear, a very different backdrop with what the LDI funds recapitalization and some other factors. So we're not seeing that, but the market remembers that. And when you see the yields for developed market country going up and the currency going down, that's not usually a good sign. And that's what's causing a lot of panic here. You know, we'll have to wait and see if we get some sentiment shift around fiscal concerns or also, you know, there's a global backup in yields going on. If we start seeing more broad relief in fixed income markets, that could help as well. Is this a dress rehearsal, Dan? And you're quite right to point out the global nature of this bond market route. Is this a test case for the US and the incoming administration to get fiscal policy, to get the taxation policy right? There doesn't seem to be a lot of common ground between Scott Besant and the President-elect Trump in terms of the fiscal plan. How much volatility could that create in fixed income markets and the dollar? Yeah, it's a concern for sure. I think that there's two factors going on. So absolutely, some of it is just concerns around fiscal more broadly this year, and not just for the US. Again, the UK is in focus. France has been a country that's in focus for this. The markets are more sensitive to fiscal concerns in DiEM more than ever. Part of it is the incoming Trump administration, what's going to happen there. The other thing right now, though, is that we're going to get a lot of news on January 21, a lot of new information, and especially in the days after that. I think the markets right now are in a little bit of a buyer strike at the same time that we're getting a lot of issuance. Because why take a leap of faith right now when you're going to have a lot more information in just a couple of weeks? And so that buyer strike means deals just keep moving up pretty aggressively. So yes, I think there is absolutely a Trump factor to this. But also right now, just the lack of market participants wanting to get involved in the market. Dan, you know, and Sri is keeping a very, very close eye on this Besson and of course, his 333 plan, which is 3% budget deficit capital, about 3% growth and 3 million more barrels a day of oil produced here. You know, when I take a look at these elements here, it seems to suggest that if dollar were to stay as strong as it is now or get even stronger, he's not going to be able to do that 333. It's going to require a more cooperative dollar. What do you think? Well, I think in general, the market is telling you they're not necessarily convinced yet that any type of real deficit tightening is likely to come. So, you know, even aside from what the dollar does, there's already skepticism just on the ability to rein in the fiscal side. Certainly, we see a materially stronger dollar from here, then that also becomes another factor that makes certain things more difficult, including, you know, the effect of tariffs on actually changing domestic manufacturing. So the way that we're thinking about it, though, is the market has already priced a lot in, and we do expect a little bit more upside here in the dollar as we head into the inauguration. But if we're not getting any big shocks, especially on the tariff side, in the first few days, and it looks like it's going to be a little bit more sanguine, which is kind of the market base case, we might be reaching a peak in the dollar in the next couple of weeks, maybe, you know, maybe in the next month or so. So again, the same as us, we're also waiting for inauguration day to get a lot more information on what we should be doing. Yeah.