Long End of the Curve Is Where Risk Comes In: Misra
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How much risk is in the so-called risk free asset? So depends on what you define by risk. Credit risk. There is no credit risk. I mean, the US issues fiat currency, we we will pay back our debt, the duration risk which is really a function of term premium or I don't want to bond geek out here, but risk premium that's much higher. So you're looking out the curve. There's a lot of risk in most any of her diamonds you look in Japan. So I think if there's a global rise in rates, if we're ignoring I mean, I think the whole Moody's downgrade, we knew about it. It was lagging. I hear you. But, you know, in the words of Hemingway, you know, how do you go bankrupt? And not that I'm saying that the US is going bankrupt, but, you know, it's gradually and then suddenly and I think, are we at that point where the market sees, you know, what we have to look out for fiscal sustainability, Congress is is not doing its bit. So the bond market has to force Congress to do its bit. And so I think that's why the long end is scary because how high do rates have to go before the administration or Congress says, you know what, We don't have the political will, but the market's forcing our hand. I'm not sure what that level is. I don't think the bond market is really beautiful right now. It's in the deep state. So, you know, that's why I think when you ask about risk, the long end has just the front end is being dragged with the long. And that's where I think there's opportunity because I think I mean, we're trying to move away from trade, but we're still in that because effective tariff rate is still high. There's uncertainty. I think the Fed will be late, but at some point they're going to get a lot more aggressively when they start. So the front end, I like the long and that's where that risk comes in.
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