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Time now for today's strategy session. The $29 trillion dollar bond market is seeing its rally continue today. Fed chair Jerome Powell. Well, at least it was seeing its rally continue. Fed chair Jerome Powell tries to ease growth and inflation concerns. So, what's the bull and what's the bear cases? The bears are having their way at least early out the gates this morning for the markets as investors and the Fed grapple with growing uncertainty. Joining us now, we've got George Katrinbrun, who's the DW's group head of fixed income and head of trading here. So, you saw the market action that we're seeing in the bond landscape right now. Why do you think that's playing out post yesterday's Fed announcement?

It's a reaction to Powell. He was great yesterday. One of his better press conferences, 10 and two on the steering wheel, middle lane, keeping up with traffic. And, you know, I guess really doing a good job from what people were worried about going into this, which was that, yeah, of course, um, unemployment may go up, inflation may go up, growth may come down. What about those cuts? And leaving two cuts in that dot plot, I think, is what relaxed everybody and really calmed the bond market from where we were going in.

You laid out a bull and a bear case for the market in your notes over to us, which gave me a lot of clarity and what is the only thing that's certain is the uncertainty right now. Can you walk our audience through that bull and bear case and which of the two you think is more likely right now?

Yeah. Look, I mean, right now from a bull perspective, unemployment rate is only at 4.1%. We had 150 in payroll adds. Uh, capital markets are functioning. IG spreads are pretty tight. So, it's really not that bad. And right now, the soft data could be head faking that hard data. So, I think that's the bull case that we've seen these kind of spooks before. We saw NP and Q3, CPI and Q1, Q4 and now Q1 we had this sort of growth scare that's there. So, it really could be a storm in a teacup. And we had a negative GDP in Q1 of 2024 as well. Look how that year turned out. So, the bear case is, this is a K-shaped economy that we don't have any more pricing power left. The consumer is really shot and now this uncertainty is forcing companies to pull back, consumers to pull back and there's really no fiscal impulse this time around with Trump and the kind of the cutbacks that are happening with DOD and in government spending and otherwise. So, yeah, those are the two sort of bull and bears. And no one really has that certainty and clarity right now. Maybe Trump does. That's what you're seeing in this push and pull right now with the market.

And so, with all of this, I'm focused in and I'm locked in on what we had on the screen a moment ago in the 10-year because that 10-year is more tied to mortgage rates and shelter has been the stickiest portion of inflation. Are these moves material enough for there to be some easing in the pressure that we've seen from the shelter component side as the Fed is reading through and trying to best gauge what their next steps should be?

Well, it's been coming down. And if anything, goods has been more of a concern in Powell's press conference yesterday. So, it's slow, shelter and rents tend to reset every year. And Trump and percent, percent is the world's largest bond salesman. That's why they're very keen to bring down that 10-year benchmark rate. It's come down most weeks that Trump's actually been in office. And I think that's their priority is to get that down to help housing and understand that shelter and our housing and our housing market is a large part of our overall economy.