Lars Toomre is simply amazed by today's capital markets, particularly the American fixed-income markets. There is considerable talk about "buying duration" because real yields are now around two percent in the longer-duration sectors. As a member of the 1980s "Bond Vigilante" traders community, Lars simply replies when asked, "Are you nuts?"
Today's Capital Markets are far too much influenced by recent history. Few traders or portfolio managers remember the 1979-1986 period. Interest rates still tend to go from one extreme to the other. We are not close to the peak interest rate for the 10 yr TSY during this Federal Reserve fund rate increase move. Lars is on record from 2023-01-01 predicting that the TSY 10 yr yield will hit 5 percent before it next hits 3 percent.
These markets (fixed-income, equity, and currencies) are trading on something called hopium. There is an enormous storm coming that will severely stress the American financial system. Ever hear of commercial real estate mortgages and the wall of maturing junk debt in 2025?
The Brass Rat Capital recommendation is to keep money relatively short in duration, clipping coupons and probably laddered out to the four-year maturity sector. The regional banking crisis so evident in March 2023 is far from over.