US 2-Year Bonds

Theres an important wild card looming in the US with a new Fed Chair due in 2026 and President Trump is keen to get a similarly aligned person to himself onboard – at this stage he said that Kevin Hassett and Kevin Warsh are his top choices to lead the US Fed and that he expects the next chair of the central bank to consult with him on interest rates. An interesting scenario as the Fed is supposed to be independent of the Whitehouse.

• Trump, recently called for aggressively lowering rates, saying they should be “1% and maybe lower than that.”

If we get a “Trump” puppet heading up the Fed US interest rates are likely to move significantly lower, good for stocks in the short term.

• The US 2’s are trading around the effective cash rate which feels too high, in terms of yield, moving into 2026.