What the bond market is telling us about inflation, debt and the economy

• Bond yields are rising due to inflation concerns and debt picture, with some seeing attractive levels for long-term bonds, while others see continued upside risk.
• One analyst believes the Fed will hike in December, not before midterms, and expects oil prices to remain contained, with a 70% probability of US economic expansion.
• The other analyst has reduced duration in portfolios, focused on short-dated treasuries, and taken profits in equities due to 'over-enthusiasm' and signs of embedded inflation, particularly in refined products and housing.
• European equities are seen as a higher beta market, tending to sell off harder than the US, despite potentially cheaper valuations.

The discussion centers on bond market turmoil, inflation, and equity valuations. One analyst expresses a cautious but not panicking view, favoring international and small-cap value equities, while the other is more concerned about rising yields, embedded inflation, and has taken profits in equities. Both highlight the challenges for asset allocators in the current environment.