Cathie Wood Just Indirectly Implied That Long-Term Treasury Bonds Have 35% Upside

Core Viewpoint - Cathie Wood's prediction of a potential drop in inflation to zero could significantly impact long-term Treasuries, suggesting a bullish outlook for this asset class if her forecast materializes [4][5][11] Inflation Outlook - Wood believes inflation could decrease substantially due to various factors, including falling oil prices and rents, despite existing pressures from tariffs [4][5] - The current 10-year breakeven inflation rate is approximately 2.3%, and if inflation were to drop to zero, long-term bond yields could also decrease by around 2.3% [6] Long-term Treasuries Potential - The iShares 20+ Year Treasury Bond ETF (TLT) has a duration of about 15.5 years, indicating that for every 1 percentage-point decrease in interest rates, the ETF's value could rise by 15.5% [7] - If long-term rates decline by 2.3 percentage points, this could imply a potential upside of 35% for long-term Treasuries if Wood's prediction holds true [8] Economic Indicators - Current economic indicators suggest a cooling labor market and a shrinking manufacturing sector, which may contribute to disinflation [10] - The potential influence of artificial intelligence on disinflationary trends is noted as a significant factor that could positively affect the bond market [11]