Name: Where to Invest Ahead of the Fed’s Interest Rate Decision and Trump Trade War
Uploaded: 2025-03-16T10:00:00Z
Duration: 20 min 50 s
Description: WSJ’s Take On the Week co-host Telis Demos talks with interest rate strategist Ed Al-Hussainy about what to expect from the upcoming Federal Reserve meeting, how policy in Washington is intersecting with the central bank’s mission and more.

https://www.barrons.com/client

Topics

Memberships

Tools

Customer Service

Network

Newsstand

For Business

For Education

For Advertisers

Account

About Barron's

bolded

unBolded

Under CEO Cristiano Amon, semiconductor company Qualcomm is bringing its technology to multiple industries. This conversation was recorded on May 28, 2025.

https://m.wsj.net/video/20250717/f95245f1-1b2d-453e-a058-30d6a835822a/1/hls/manifest-hd-wifi.m3u8

Qualcomm CEO Shares the Company's Disruption Strategy

That's according to Okta CEO Todd McKinnon, who also spoke about how the company's name is tied to pilots and why flexibility is a core aspect of Okta's business.

https://m.wsj.net/video/20250710/d3fadd54-0fc6-4961-a2c0-0d858131e3c7/1/hls/manifest-hd-wifi.m3u8

Why Okta Wants 'Authentication to Disappear'

Dr. Robert Grossman, CEO of NYU Langone Health, which has consistently ranked as one of the best hospitals in the nation. talked about the Trump administration's plans to significantly cut the budget of the National Institutes of Health (NIH).

https://m.wsj.net/video/20250715/02e28b09-0b7e-4a48-8227-6dbbb42d9598/1/hls/manifest-hd-wifi.m3u8

NYU Langone CEO on NIH Cuts: 'That Takes a Scalpel, Not a Sledgehammer'

Though quality of care is excellent in the U.S., access to care needs to be improved, said Dr. Robert Grossman, CEO of NYU Langone Health, which has consistently ranked as one of the best hospitals in the nation.

https://m.wsj.net/video/20250715/fc3563ea-508b-4d6d-b32a-a77f939c6e5b/1/hls/manifest-hd-wifi.m3u8

NYU Langone CEO Says This Can Help the U.S. Government Fix Healthcare

Dr. Robert Grossman, CEO of NYU Langone Health, spoke to At Barron's about how the health system has transformed and changes he made along the way.

https://m.wsj.net/video/20250703/c25a5233-a5a6-48c9-bf10-ea3948ab7d7b/1/hls/manifest-hd-wifi.m3u8

How This Massive NYC Health System Changed Its Business Model

"The economic implications for the U.S. are profound," said Greg Case, CEO of Aon.

https://m.wsj.net/video/20250709/57231b7d-6d25-4c2e-ae5c-f0b6a6299196/1/hls/manifest-hd-wifi.m3u8

Why Aon's CEO Is Betting on GLP-1 and Other Weight-Loss Meds

"It creates opportunity, which is terrific, but it also creates volatility," said Greg Case, CEO of Aon, talking about the connectivity and complexity underpinning today's business environment.

https://m.wsj.net/video/20250709/c5c85274-4515-484f-8cf4-2a6b3056b927/1/hls/manifest-hd-wifi.m3u8

Why Aon's CEO Thinks Volatility Isn't Going Anywhere

Greg Case, CEO of Aon, explains 4 causes of global volatility the risk manager helps clients navigate.

https://m.wsj.net/video/20250626/65d52c3a-2940-4439-acfa-78e7f53dde15/1/hls/manifest-hd-wifi.m3u8

4 Megatrends That Cause Volatility in the World: Aon CEO

Scott Bok, the former board chair of the University of Pennsylvania, breaks down the financial risks and implications that come with removing tax-exempt status from colleges and universities.

https://m.wsj.net/video/20250709/c8469d5c-8f50-48fd-acb8-97f3b510ea21/1/hls/manifest-hd-wifi.m3u8

Taking Away Tax-Exempt Status: A “Nuclear Weapon Against Universities”

At Barron's

Saira Malik, chief investment officer of Nuveen, makes the case for more gains in 2023.

https://m.wsj.net/video/20230925/4d8aa5ee-77aa-4400-884b-1fafeff893ec/1/hls/manifest-hd-wifi.m3u8

S&P 4700?

David Bailin, chief investment officer of Citi Global Wealth, offers his take on the latest IPO activity and what it says about the strength of capital markets.

https://m.wsj.net/video/20230925/5f4d4a28-d83a-40e3-ad94-28bc25b1c3bc/1/hls/manifest-hd-wifi.m3u8

IPOs: Making a Comeback

Chris Harvey, head of equity strategy at Wells Fargo Securities, explains what would make him more bullish on stocks and when he sees a Fed rate cut coming.

https://m.wsj.net/video/20230918/1f534ddf-5da9-4d1d-9926-fda63e90468e/1/hls/manifest-hd-wifi.m3u8

Cuts on the Horizon?

Tom Kennedy, chief investment strategist for J.P. Morgan Global Wealth Management, explains why he thinks concerns around a slowdown in China are overblown.

https://m.wsj.net/video/20230918/09304272-5f0c-49df-892a-3a3d4622c9c3/1/hls/manifest-hd-wifi.m3u8

Evaluating China Risk

Liz Young, head of investment strategy at SoFi, discusses how market moving the August inflation data could be.

https://m.wsj.net/video/20230911/50b8c6b4-8fd3-4d6f-adff-dd0a024a57d7/1/hls/manifest-hd-wifi.m3u8

Inflation in the Spotlight

Lindsey Piegza, chief economist at Stifel, offers her take on the biggest risks to the economy right now.

https://m.wsj.net/video/20230911/cac885e4-b322-40f8-876c-ebd443fe9d29/1/hls/manifest-hd-wifi.m3u8

Assessing Economic Headwinds 

Dan Ives, managing director and senior equity analyst at Wedbush Securities, explains why he thinks Apple will continue to be a market leader.

https://m.wsj.net/video/20230905/1a48f030-5a5a-401c-a571-ec9115a0155e/1/hls/manifest-hd-wifi.m3u8

Prove-me Moment

Ross Mayfield, investment strategy analyst at Baird, highlights bullish catalysts that could drive the market higher between now and year-end.

https://m.wsj.net/video/20230905/729974df-4594-4fc6-a385-5457b1d87e32/1/hls/manifest-hd-wifi.m3u8

Gearing up for a Rally

Matthew Luzzetti, chief U.S. economist at Deutsche Bank, discusses what’s next for the Federal Reserve and the economy.

https://m.wsj.net/video/20230501/7264fcc9-eea9-4d99-b839-4cd4c20500c9/1/hls/manifest-hd-wifi.m3u8

Recession Ahead 

MarketBrief | Clips

MarketBrief Clips

David Bailin of Citi Global Wealth and Saira Malik of Nuveen debate the probability of a recession and discuss where they’re finding opportunities in equities and fixed income.

https://m.wsj.net/video/20230925/a61dd831-40b8-4727-934f-077d2b880711/1/hls/manifest-hd-wifi.m3u8

Investing in a Slowing Economy 

Take stock of your investments in less than 10 minutes with new show from Barron’s and MarketWatch.

Chris Harvey of Wells Fargo Securities explains why he believes the Federal Reserve is done hiking interest rates while J.P. Morgan Global Wealth Management’s Tom Kennedy makes the case for multi-asset investing.

https://m.wsj.net/video/20230918/84e9a4a4-4e50-4b7b-934c-9a532f9803fc/1/hls/manifest-hd-wifi.m3u8

Rate Hikes in the Rearview?

Lindsey Piegza of Stifel discusses the upside risks for inflation while SoFi’s Liz Young explains why she’s cautious on the market through year-end.

https://m.wsj.net/video/20230911/395ecb74-e349-45b0-a6b8-f91b8874aaf8/1/hls/manifest-hd-wifi.m3u8

Pricing Pressure & Frothy Valuations

Baird’s Ross Mayfield makes the case for a better than expected September for stocks while Dan Ives of Wedbush Securities explains why big tech can rally another 15%.

https://m.wsj.net/video/20230905/156bf778-e13d-41ef-b750-55e2ef1c0162/1/hls/manifest-hd-wifi.m3u8

September to Remember? 

Kristen Bitterly of Citi Global Wealth Management explains why the strong start to the year is nothing more than a bear market rally while Eric Winograd of AllianceBernstein offers his outlook for the Fed, inflation, and the labor market.

https://m.wsj.net/video/20230220/ae07e591-f017-4e82-babb-c80144e7d42f/1/hls/manifest-hd-wifi.m3u8

Time to be Skeptical?

Anastasia Amoroso of iCapital explains why she thinks the stock market rally is nearing a ceiling while U.S. Bank Wealth Management’s Lisa Erickson discusses where she’s finding investment opportunities in an uncertain environment.

https://m.wsj.net/video/20230213/61be15a3-f5ac-4a25-b944-edd15e605e30/1/hls/manifest-hd-wifi.m3u8

Hitting a Wall

Jack Manley of J.P. Morgan Asset Management explains why now is the time to leg back into risk assets while BlackRock’s Rick Rieder offers his top fixed income opportunities.

https://m.wsj.net/video/20230206/0be0daa9-d29a-4350-b277-a9ee6ed9a2ea/1/hls/manifest-hd-wifi.m3u8

Two Ways to Play

Amid impressive January gains, Cameron Dawson of New Edge Wealth discusses how she’s positioning her portfolio and Mark Zandi of Moody's Analytics explains why he thinks the economy can still avoid a recession.

https://m.wsj.net/video/20230130/a8c37d62-592b-4830-9466-65c3824205fe/1/hls/manifest-hd-wifi.m3u8

Gauging Upside Potential

Mike Schumacher of Wells Fargo Securities explains why he’s nervous about stagflation while Sylvia Jablonski of Defiance Investments offers her top portfolio picks.

https://m.wsj.net/video/20230123/1e752a76-b7d4-4802-821a-837d6176f979/1/hls/manifest-hd-wifi.m3u8

Wall Street’s Biggest Risk

MarketBrief | Full Episodes

MarketBrief Full Episodes

After 10 straight hikes, the central bank switched gears and opted to keep rates steady. But that doesn't mean the Fed's inflation fight is over.

https://m.wsj.net/video/20230616/9dce6e5c-4c62-4aa6-b432-d3407ac41aea/1/hls/manifest-hd-wifi.m3u8

The Fed's Rate Pause, Explained

A publicly traded company can increase it's number of shares available by splitting its stock. Here's why companies may do it and how it affects investors.

https://m.wsj.net/video/20221115/f37dedad-4403-4f6d-bd22-067d0fb148df/1/hls/manifest-hd-wifi.m3u8

Stock Splits Are Big This Year. Here's What They Mean for Investors.

Here's why a publicly traded company may decide to go private and what it means for its shareholders.

https://m.wsj.net/video/20221025/9fb3fa20-e2ac-485b-aa4d-8fcf3ebd3151/1/hls/manifest-hd-wifi.m3u8

What Happens When a Stock Goes Private?

What Happens When a Public Company Goes Private?

When saving for retirement, there are many different accounts and tax strategies to consider. Here's how to tell if a Roth IRA conversion could be right for you.

https://m.wsj.net/video/20221021/624f992c-db58-4144-93cc-b888c6948059/1/hls/manifest-hd-wifi.m3u8

What to Know About Roth IRA Conversions

As recession fears loom, here are three ways investors can prepare and protect their portfolios.

https://m.wsj.net/video/20221020/5d94fa79-7b6d-4c51-8ac7-8c523c99d487/1/hls/manifest-hd-wifi.m3u8

Preparing Your Portfolio for a Recession

Retiring abroad could lower your cost of living, so you can make your savings go further in your golden years. But a permanent move to a new country could be more complicated than you think. Here's what you should know.

https://m.wsj.net/video/20220823/7a028383-44a0-4957-a070-0018f046ec97/1/hls/manifest-hd-wifi.m3u8

Thinking Of Retiring Abroad? Here's What to Consider.

Billionaire-backed space companies have made space tourism a reality. How to participate in a potential private-sector space boom.

https://m.wsj.net/video/20220818/99bac587-9be5-48e6-9376-48f3bb8d55cf/1/hls/manifest-hd-wifi.m3u8

How To Invest In Space Tourism

When you hear the words 'electric vehicle', you might immediately think 'Tesla'. But as more automakers enter the EV competition, Tesla might have trouble holding its lead. Here's what investors need to know.

https://m.wsj.net/video/20220722/111776c7-d9d2-4cd2-8194-4c58b0cb7e57/1/hls/manifest-hd-wifi.m3u8

Is Tesla Miles Ahead of Others in the Electric Vehicle Race?

Chinese tech company DiDi Global, which runs a ride-sharing app, has announced it plans to delist from the New York Stock Exchange. Investors are watching and waiting to see what other Chinese giants with U.S. listings, like Alibaba and JD.com, will do. Here's what delisting entails.

https://m.wsj.net/video/20220722/eacf026e-7303-4eb7-80ab-3e2344e2b120/1/hls/manifest-hd-wifi.m3u8

What Happens When a Stock Delists?

Barron's Explains

CEO Cristiano Amon has a plan to shrink Qualcomm’s reliance on phones and grow its role in AI, cars, and beyond. Investors are skeptical—should they be?

https://m.wsj.net/video/20241127/99579ccd-a5c1-4acc-ac31-32469f7d8b1c/1/hls/manifest-hd-wifi.m3u8

What's Next for Qualcomm?

On the Barron's Streetwise Podcast, Barron’s senior writer Al Root sits down with Jack Hough to discuss Toyota’s recent success with hybrids, the coolest cars at the New York Auto Show, and what’s ahead for Tesla stock.

https://m.wsj.net/video/20240329/f163bbd7-0cb6-4c6f-b7f9-a85ae5cd2553/1/hls/manifest-hd-wifi.m3u8

Is Electric Vehicle Demand Cooling Off? 

On the Barron’s Streetwise podcast, Rystad Energy’s Alexandre Ramos Peon discusses how U.S. oil producers have boosted profitability and production despite fewer wells.

https://m.wsj.net/video/20240326/0a4b30c7-379c-460f-abc3-838a7f1eb1a9/1/hls/manifest-hd-wifi.m3u8

The Outlook for Oil

On the Barron’s Streetwise Podcast, Jack Hough pushes back against one of Bitcoin’s most popular valuation models.

https://m.wsj.net/video/20240318/b38cc34a-5064-4a6a-a47c-4c855de11973/1/hls/manifest-hd-wifi.m3u8

Bitcoin as 'Digital Gold' 

On the Barron’s Streetwise podcast, Raphael Zagury of Swan Bitcoin shares his bitcoin price model with Associate Editor Jack Hough.

https://m.wsj.net/video/20240312/c0acb0bf-e4e3-46ca-8fd5-13af6fa401e5/1/hls/manifest-hd-wifi.m3u8

The $600,000 Case for Bitcoin

Kathy Jones, Chief Fixed Income Strategist at Schwab, says it might not matter. Plus, the outlook for yields and the national debt.

https://m.wsj.net/video/20240305/0505813c-e38b-47cb-ade2-e7c3aff68dbd/1/hls/manifest-hd-wifi.m3u8

Bond Funds or Individual Bonds?

Brian Niccol on developing new customer favorites, taking menu tips from TikTok, and the outlook for growing the business.

https://m.wsj.net/video/20230725/dec91556-4dbe-49e6-85d9-ed0e8233ac02/1/hls/manifest-hd-wifi.m3u8

Chipotle's CEO on How He Plans to Double the Business. Again.

Jim Farley on competing with Tesla, and why Ford is favoring Level 3 autonomy over full self-driving capability.

https://m.wsj.net/video/20230519/9aa4288a-39a1-4fb8-8b9d-3be0c58adc18/1/hls/manifest-hd-wifi.m3u8

Ford CEO On the Outlook for EVs and Robo Cars

J.P. Morgan Asset Management's David Kelly says inflation is like a rollercoaster: It will come down again.

https://m.wsj.net/video/20230505/5d8d3d70-598d-4ee4-a76e-21381c911e40/1/hls/manifest-hd-wifi.m3u8

Inflation, Attractive Bonds, and Value Abroad

Barron's Streetwise

Stocks are expensive, risks abound, and AI is about to change the world. Other than that, building a calamity-proof retirement portfolio should be a cinch. Tune in as two veteran money managers size up the markets and share their investment ideas.

https://m.wsj.net/video/20250211/17a5e7d6-7c36-44b0-a35e-bf5ac3a24194/1/hls/manifest-hd-wifi.m3u8

Saving for a Sunny Day

Research shows that people greatly underestimate the healthcare costs they’ll face in retirement. Learn from experts how to estimate those costs, prepare for potential long-term care needs, and manage healthcare expenses in retirement.

https://m.wsj.net/video/20250211/e7c022d9-badf-4e95-8e7c-0b6fce9f7823/1/hls/manifest-hd-wifi.m3u8

Are You Fiscally Fit?

Surging power demand, new energy sources, and growing competition have spurred the utility industry to become more innovative than ever before. Our panelists will unpack the changes afoot and explore what lies ahead for companies, customers, and investors.

https://m.wsj.net/video/20240917/001ea098-1fcc-4da5-9f0e-a3b149bbb2fb/1/hls/manifest-hd-wifi.m3u8

Not Your Father's Utility

Modernizing America's grid will take creativity and money -- lots of money. Learn how players across the power sector can achieve their electrification goals and serve new customers without breaking the bank for consumers.

https://m.wsj.net/video/20240917/bd6bd43a-bb07-4b7f-9d1c-6ae04220bea9/1/hls/manifest-hd-wifi.m3u8

Ready for a Revamp?

The launch this year of Bitcoin ETFs has made it easier for investors to buy and trade the cryptocurrency. But is that a wise move, and if so, how much crypto should you own?

https://m.wsj.net/video/20240529/cbb77f15-ef70-445d-85ae-5f02c24ea1ef/1/hls/manifest-hd-wifi.m3u8

Investing in Cryptocurrencies

Bitcoin and other digital currencies reside on software networks that aim to revolutionize everything from finance to art. Barron's talks to industry experts about the outlook for blockchain technology and its potential uses.

https://m.wsj.net/video/20240529/8f60a5ea-6de4-4c3c-b7c2-12b11aaa99f3/1/hls/manifest-hd-wifi.m3u8

Is Crypto Really a Game-Changer?

Persistent inflation means retirement savings don't go as far as they once did. We discuss the best inflation hedges, and how retirees can benefit from higher-for-longer interest rates.

https://m.wsj.net/video/20240429/69577ad6-cbaf-4d34-96f1-c42136e26aa2/1/hls/manifest-hd-wifi.m3u8

Protecting Your Nest Egg from Rising Prices

The impact of inflation is felt unevenly across the economy and markets. Learn which industries, and companies do best in a “sticky” inflation era, and how fixed income, alternative assets, and gold can help investors hedge against further price growth.

https://m.wsj.net/video/20240429/bfee3cb8-715f-4323-929f-43a73fd58877/1/hls/manifest-hd-wifi.m3u8

Don’t Trim Your Inflation Hedges

Science, tech, and better healthcare delivery are helping people live longer and improving quality of life. Two healthcare investment experts tell us about some of the most promising developments in medicine, and the companies behind them.

https://m.wsj.net/video/20240305/33bed2b1-bdef-401f-bb72-18f7a43f2548/1/hls/manifest-hd-wifi.m3u8

Longevity: An Investor's Playbook

Barron's Roundtable

Barron's Advisor The Way Forward

Investing in Tech

Barron's Investing in Tech Clips

A Better Economy & Wealth Gap Events

Wealth Gap

Level Up

Barron's Events

Back to Business

Great Investors

MarketWatch

Video Center - Barron's home

WSJ’s Take On the Week co-host Telis Demos talks with interest rate strategist Ed Al-Hussainy about what to expect from the upcoming Federal Reserve meeting, how policy in Washington is intersecting with the central bank’s mission and more. Photo: WSJ

https://m.wsj.net/video/20250314/e975ad2c-4291-49da-b437-07ceb9fdae5f/1/hls/manifest-hd-wifi.m3u8

WSJ’s Take On the Week co-host Telis Demos talks with interest rate strategist Ed Al-Hussainy about what to expect from the upcoming Federal Reserve meeting, how policy in Washington is intersecting with the central bank’s mission and more.

Where to Invest Ahead of the Fed’s Interest Rate Decision and Trump Trade War

What would you say is the Fed's relationship with politics in Washington right now? Are they more engaged with it than usual, trying to stay out of it? Does that complicate things for thinking about what they might do next?

They're desperately trying to stay out of it, is the way I would characterize it. And it's impossible.

The Federal Reserve is always a key player in the markets. But sometimes, it feels like it's the only thing that matters. And right now, with more investors uncertain about the economic outlook and the general policy volatility of the Trump administration, more people are betting, hoping that the Federal Reserve might ride to the rescue in the near future. So, what better time for a conversation with Ed Al-Hussainy? He is the interest rate strategist for Asset Manager Columbia Threadneedle Investments. And this is "WSJ's Take On the Week". As you can see, we're back in our temporary studio. But as always, I'm Telis Demos. Ed, welcome to our show.

Good morning.

Let's get right into it. The Federal Reserve is meeting this upcoming week on March 18th and 19th. What are you looking for out of this meeting?

I think, in contrast to what's going on in DC, I am looking for the Federal Reserve to take itself out of the equation and be quiet shell.

So, no big news is the big news.

No big news is the big news. They've telegraphed this quite well. We're at a stage where the Fed is trying to build some confidence around what's going on in the economy, particularly around what's going on in the inflation story. And right now, it's just too early. And so, it's likely that they're gonna be on hold well into the summer, potentially into the early fall.

So, in by doing nothing, you're saying the Federal Reserve can actually, kind of do something by sort of sending the signal that "No need to panic, everything's okay."

I think, that's exactly right. Reinforcing the fact that the economy is in a relatively stable place, there's some changes happening on the margin. Again, policy is coming into play. We had a really strong year last year in terms of growth in terms of the labor market. Some of that strength might be fading in the background. But it's not enough to bring the Fed into the equation, not enough to bring the Fed into action at this stage.

So, the markets had been betting at some point that the Fed wasn't gonna cut at all? Was that sort of where things were headed?

It was less than two and now, it's a shade more than three. The great thing about these expectations is they move on a daily basis. And they're the collective wisdom of the market and it's almost certainly wrong. And again, I think the Fed is in a position where they can reinforce the fact that they just don't have enough information yet to act. They're also in a position to reinforce two other, I think, important things. One, that the next move is likely to be a cut. I think that's important in terms of shaping, once again, shaping expectations, shaping where treasury yields will be in the course of this year, just the rough zip code. And reinforcing the fact that monetary policy is still quite tight.

Hmm.

They are restrictive at this stage. They executed a hundred basis points, a percentage point of cuts last year.

That's 111 point of cuts basically, rates went down-

Ed Al-Hussainy: One percent.

A whole percentage point.

The whole percentage point, it was very aggressive. It happened across three meetings in the fourth quarter of last year. They paused there with the understanding that there's a lot more work to do in terms of recalibrating where they are, recalibrating their posture. That's gonna proceed very likely this year. But we just don't have enough data for them to front-load it into the first half of this year.

And talk to us about the economic environment right now. Obviously, the Fed thinks about part of its mission is to combat inflation, part of its mission is to further economic growth. But there's so much kind of interacting in those two spheres right now. What's going on with policy? How would you describe the economic moment right now?

We have a new administration that's come in with a dramatically different vision for where they want the economy to end up in the coming years, if not in the coming decades. We're at the very early stages of them trying to execute on this vision. That's a big secular shift. A more closed economy, perhaps an economy that's a little bit more manufacturing-intensive and an economy that in many ways, it takes us away from kind of the secular trends that we've seen over the course of the past several decades where services have really taken over. The economy has been leaking productivity. Productivity has been uncharacteristically low over the course of the past two decades.

So, we're talking about economics, but your day job is not economist, you're an investor, you work at an asset management company. How should investors be thinking about not just what the Fed is doing, but then also what that tells us about the economy? What's the right path for an investor during this period of uncertainty, would you say?

If you are an investor and you're constructing your portfolio, whether you're an institutional investor, a retail investor, there really is no difference. You're thinking about how do you allocate across risky assets like equities and more safe-haven assets like US treasuries and high-quality corporate debt. And one of the things you are betting on, is if there is going to be a disruption in, let's say, equity markets, equities come down, you want some ballast, you want some buffer coming from the treasury and the high-quality bonds out of the portfolio.

60/40 portfolio is not dead yet, okay?

It is most certainly not dead. We can have an argument about the right proportions, but the intuition is very powerful. And it's important to recognize that when we have periods of high unanticipated inflation, 2022 is a fantastic example, 2018 is a fantastic example. Risk assets and bonds underperform cash. So, the diversification benefit evaporates, 'cause everything sells off. One of the bets we're making actively right now, is that most of that inflation risk, is in the rear-view mirror, which gives bonds that fantastic quality back that they're able to buffer your portfolios, that they outperform in an environment when there's a drawdown in risk assets.

And when you say bonds, are you talking more corporate bonds, treasury bonds and in general, you're referring to longer-term bonds, right? Five, 10, 20, 30-year-type investments?

Exactly right. So, the yield curve is relatively flat. So, in terms of the yield, you get-

Meaning that short-term interest rates and long-term interest rates are pretty similar.

Pretty similar.

You're not getting a huge pickup in yield by putting your money away longer in a longer-term bond.

Exactly right. There is a compelling argument to not being in cash, not being in a money market fund. There is a compelling argument to owning treasuries. High-quality corporate debt like does offer you a little bit of a pickup. But honestly, credit spreads, which is the yield difference between treasuries and corporate debt-

Hmm.

Is that multi-decade lows.

And it sounds like even if the Federal Reserve is not in cutting mode, you're saying that the bet still is leaning on the side of they will at some point start cutting and so, maybe, that's why this is the time to get into duration maybe ahead of that.

That's right. And a simplifying question to ask, is "Do you think the next thing the Fed will do, will it be a cut or a hike?" If it is a cut, it adds significant buffers to that bond story. If it's a hike, it means something's gone wrong, the Fed is seeing inflation in the horizon. It's unanticipated, right, relative to where we are today. And that's the toxic backdrop for bonds. I think, the risk of that is there, but it's relatively low.

The housing part of the economy has not been doing very well lately. Not a lot of people have been buying and selling homes. Home prices are high, but the market is stagnant. Where does that leave an investor? Some people, I think, have been moving into mortgage bonds, right? There are a few ETFs that offer that sort of exposure. Obviously, there are people, who are also waiting for mortgage rates to come down to buy a new house or move. From a fixed income investor's point of view, what are your thoughts about the mortgage market?

We tend to think about mortgages, particularly agency, what are called agency-backed, mortgage-backed securities-

Those are the Fannie-Freddie kind of benchmark mortgage bonds.

That's exactly right. And because they have the government backstop, they carry very little credit risk. So, the risk of a default when you're buying that security is close to zero. So, what you're really looking at, is to what extent, does that security give you a yield pickup relative to treasuries? To what extent does it give you a yield pickup relative to safe corporate debt? And then, what is the risk here? And the risk with these securities is refinancing. And the good news today, is because mortgage rates are really high, the odds of large-scale refinancing in the economy are very low.

Meaning that people pay back the mortgage and then, get another mortgage at a lower interest rate, right? So, essentially, the yield that you're collecting goes down, because people are refinancing at a lower rate.

That's exactly right. They go back to their bank. They say, "Look, interest rates have declined, we took our mortgage at a significantly higher interest rate, we'd like to refinance into that lower rate," which is again an option to mortgage holders. And that's what we call prepayment risk. You are bringing forward your payments. And so, as the holder of that security, the value goes down. We don't wanna be on that receiving end. And the good news is right now, mortgage rates are still very elevated. The odds of that happening are very low. Most people who own a home today have a mortgage somewhere in a three to four percent area. And outstanding mortgage rates, if you are a new home buyer, you are getting a mortgage of seven percent.

So, given all that, Ed, what's your outlook for mortgage rates?

The mortgage rate is sort of inexorably connected to where the 10-year Treasury yield will be over the coming 12, 18, 24 months.

So, it's not in the Fed's next cut. It's more in these longer-term bonds.

That's exactly right. And there's several reasons for why those mortgage rates could go down. The most obvious is an unpleasant one and that's recession. We usually have a significant decline in treasury yields in recession, unemployment goes up, inflation goes down, yields go down as the Fed gets into an aggressive cutting cycle. So, the good news is that's not the only way to get-

Okay, good.

These rates lower. One of the other key unknowns is our fiscal future. And to the extent that Congress is able to narrow the fiscal deficit, narrow the outlook for the fiscal deficit, get us on a path or on a better path of fiscal sustainability and that is picked up by markets, that takes that fiscal premium out of 10-year yields and lowers mortgage rates. But let me add kind of my personal view here. I think, the low interest rate environment is far from an aberration. It is, in many ways, the norm. It reflects our demographics, it reflects the state of productivity, which is not healthy and it reflects the impact of technology on this economy, all of which have worked to pull interest rates down in a secular way over decades. I think, what it's gonna take to bring those mortgage rates down, is really a little bit of patience.

We're gonna take a quick break. And when we come back, a few more questions about some of the more complicated things that the Fed is up to.

Details, how dare you?

We're back, we're here with Ed Al-Hussainy. He's the interest rate strategist at Asset Manager Columbia Threadneedle. So, Ed, we've been talking about the Fed and interest rate decisions, that's kind of the big headline news. But there's other things going on with the Fed's role in the economy. And there's a term that people in the markets use a lot, quantitative tightening. Tell us about, why don't you, I'll let you explain what that is and then, also tell us why we should be thinking about and looking for the Fed's comments about QT as they say.

So, the story of quantitative tightening has to begin with quantitative easing.

Okay.

And that's the process in which the Fed buys assets, particularly disproportionately treasuries issued by the US government and mortgage-backed securities, in a period of stress. And that's their way of adding liquidity to markets. It's their way of backstopping markets. That's the business they were in in 2020 and 2021. And the Fed stopped buying those assets and quickly transitioned to running off the balance sheet, which essentially means they initially stop buying them and then, they allow those assets to mature off the balance sheet. Optically what that means and this is the process of quantitative tightening, is the size of the Fed's balance sheet shrinks. And we've been in that mode for the better part of the last two years. We're now arriving at a point where that process is likely to end and it's likely to end, I think, in the coming months. And you are right, if there's one thing that comes out of the meaning, it's a signal from them that they're quite close to making that decision. Eventually, if there's stresses in that system, they cascade out into broader markets. So, if you're an investor in equity markets, this stuff is in the background, you don't wanna know about it. And you are right, you shouldn't get into that-

Okay.

Level of detail. But as the Federal Reserve, you're thinking about financial stability, you're thinking about "How do I make sure that what I'm doing with my balance sheet, doesn't go too far?" And that's the conversation, that's the debate they're having now. And I think, in terms of the signals, the smoke signals that have come out this year, it's very likely that they're gonna stop that process, or slow it significantly in the coming months.

Sounds like something like the plumbing in your house. You go to bed every night, you hope that it works and everything keeps flowing until that one day when suddenly something breaks and it becomes your world-

That's-

For the time being.

That's a great analogy.

So, we wanna hope the water keeps flowing around. In the economy, pipes don't break.

Exactly right.

We, as a society, like to think of the Fed as a politically independent organization. To the Fed, that seems important. They get drawn into politics sometimes. President Trump has very strong views about what interest rates should be. And the Fed has to think about policy, right? They have to think about politics. They don't know what tariffs will do to the economy, whether or not there will be a major change in tariffs. That's secular change stuff you were talking about. What would you say is the Fed's relationship with politics in Washington right now? Are they more engaged with it than usual, trying to stay out of it? Does that complicate things for thinking about what they might do next?

They're desperately trying to stay out of it, is the way I would characterize it. And it's impossible, like the center of gravity in DC at the moment is around significant and large-scale policy shifts that this administration is trying to execute, that Congress is likely to execute with respect to the tax code later this year. And the Fed will not be immune to them. What the Fed is trying to tell us right now, is "Look, we have a lot of flexibility with what we can do in terms of the Fed Funds Rate, the only tool we have really. If necessary, we can cut very aggressively, not a luxury we've had in the past 15 years, 'cause rates were really low. Now, we have a lot of room to cut if something starts to come off the rails. And we can stay on hold for much longer if we start to see inflation creeping back into the system. And in the extreme, we can resume our hiking cycle. It's not a conversation that's happening out in the open, but it's implicit. That gives us a lot of flexibility and a lot of buffers to stand back, observe what's going on in DC, start to actually see some of these changes in the data before we react." That's, at the very least, their view and what they're putting out at the moment. Let me say from my perspective, the history is the Fed always wants to be systematic, predictable, gradual. It never wants to act kind of too quickly.

Telis Demos: Mm-hmm .

The reality is they're always forced by events to be aggressive. That was the case in 2020 when they had to cut. That was the case in 2022 when they had to hike much more aggressively. If you go back over Fed cycles, going back to the seventies, every single Fed shift from being on hold to cutting aggressively has happened in a matter that they failed to anticipate.

Well, so, maybe, what would be unique, is if politics didn't affect what the Fed did. We're gonna take one final break. And when we come back, we've got one last question for Ed Al-Hussainy of Columbia Threadneedle. Welcome back. All right, Ed, in 30 seconds or less, what is the smartest investment that you think somebody could make right now, given the interest rate and economic outlook is so uncertain? Is it cash, gold, Bitcoin, Dogecoin? What is the all-weather investment right now?

Fantastic, I think the closest I can get to an all-weather investment is something very boring and it's really the 10-year Treasury note. Yields are still quite attractive right around that four, four-and-a-quarter percent. Adjusted for inflation, you're getting paid right around 2%. Again, think about that over the next 10 years. That's a fantastic yield relative to where we've been over the course of the past 15 years. And I think, it buys you a lot of comfort. You can come back and reallocate into risk if there's a significant drawdown in risk. We are in the middle of a correction in equities. And you don't have to worry about it on a daily basis, the way you would with some of the other things you mentioned at the beginning of that question.

Well, boring, comfort, safe, maybe, those are some of the things people are looking for right now and it's right there staring them in the face, 10-year treasuries. Ed, thanks so much for being on, talking with us about the Fed, interest rates, economy, everything going on. This has been great.

Thank you.

Thanks so much.

Was your last guest left-handed?

Okay, you're hitting on one of our favorite talking points around here, which are mugs with the branding on the wrong side.

I'm trying to angle on how I can take the mug home, 'cause you guys need a right-handed mug.

This weekly video podcast series brings you the insights and analysis you need to get a leg up on the world of money and investing. WSJ's Take On the Week cuts through the noise and dives into markets, the economy and finance.

Where to Invest Ahead of the Fed’s Interest Rate Decision and Trump Trade War

WSJ's Take On the Week

Up Next

At Barron's

View All

MarketBrief Clips

View All

MarketBrief Full Episodes

View All

Barron's Explains

View All

Barron's Streetwise

View All

Barron's Roundtable

View All

Barron's Investing in Tech Clips

View All

Wealth Gap

View All

Level Up

View All

Barron's Events

View All

Back to Business

View All

Great Investors

View All

MarketWatch

View All