David Rosenberg, founder of Rosenberg Research, challenges the prevailing inflationist narrative, arguing that current economic data points toward a slowdown rather than sustained inflation. Price shocks, such as those from energy or tariffs, fail to become persistent without feeding into wages, which currently show no signs of acceleration. The transition to a two-party system with legislative gridlock following the midterms will likely end the recent era of aggressive fiscal stimulus, historically leading to lower bond yields and economic deceleration. Furthermore, the housing market is already experiencing deflationary pressure, and global competition in AI provides additional disinflationary headwinds. While the market remains fixated on energy prices and Fed hawkishness, the bond market is significantly under-owned, positioning it for a potential rally as fiscal support wanes and Treasury supply dynamics shift.
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