By coinnews 
00:00 Speaker A
For more on the latest market moves, let’s welcome in now Sebastian Page, T. Rowe Price, head of global multi-asset and chief investment officer, as well as author of the book The Psychology of Leadership. Sebastian, always great to see you here on set.
00:13 Sebastian Page
Likewise. Thanks for having me.
00:15 Speaker A
So, let’s start with an issue front and center for investors right now, rising rates. Two questions, Sebastian, why are they rising, and two, how concerned should investors be?
00:26 Sebastian Page
Rates can rise on higher growth expectations. I don’t think that’s going on over the last few days. Rates can rise on higher inflation expectations. I think that’s part of it. Rates can rise on investors being worried about the risk of holding long maturity bonds. I think that’s what’s going on right now, and it’s related to the budget deficit. We’re running deficits that pre-COVID at 7% of GDP, we would only run in a recession. And now this budget measure is making its way through Congress, that’s getting bond investors nervous, Josh. The bond vigilantes. That’s what we call them, the bond vigilantes, is they step in when spending gets out of control.
01:21 Speaker A
And so how to my second question, you’re talking to to T. Rowe Price folks, they ask, how worried should I be, Sebastian? You tell them what?
01:31 Sebastian Page
I’ll give you a nuanced answer. We are underweight treasuries, so we’re positioned for rising rates. So you should be concerned about rising rates, and I think inflation is part of it. You have rising commodities on the horizon in my view, you have, you know, wages growing at 4%, you have a housing shortage, and you have tariffs, which are inflationary. So the risk to inflation is to the upside. However, I want to give you the nuance. I don’t think this is cataclysmic. I don’t think this is going to break risk assets and be a financial disaster because there’s still a lot of demand in the long run for US treasuries. At the same time, we have to worry about these levels of deficits. But this is not like the world’s falling apart kind of situation. And you saw it, stocks did okay today.
02:24 Speaker A
Okay.