Growth and Inflation Expectations Point Lower, Driving Bond Yield Outlook

Hedgeye CEO Keith McCullough discussed the bond market outlook on The Macro Show, arguing that both growth and inflation expectations are declining.
McCullough added $BNDD, a disinflation-focused ETF, to position for lower long-term bond yields. He noted that the 30-year Treasury yield had broken its trend, while the 10-year yield remained neutral and short-term yields stayed elevated amid expectations of a potential Federal Reserve rate hike in December.
He also challenged the assumption that bond yields fall only when oil prices decline, pointing out that yields dropped the previous week even as oil prices rose.
McCullough's Growth, Inflation and Policy (GIP) framework considers how changing economic and inflation expectations influence yields. His defensive positioning also benefited on Friday, when the S&P 500 fell 1.8%. He held consumer staples and reduced technology exposure ahead of a potential Quad 4 environment.