David Rosenberg on Why He Wants the Bonds Everyone Hates — and Where He's Hiding in Stocks

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Matt Zeigler (1:02)

Excess Returns, the channel that makes complex investing ideas simple enough to actually use where better questions lead to better decisions. He's now Rosie the riveting ETFer, at least on the TSX. It's David Rosenberg. Welcome back, David.

David Rosenberg (1:16)

Thanks, Matt. Appreciate you inviting me.

Matt Zeigler (1:20)

So what we're not exactly talking about today is new ticker R-O-S-Y available on the TSX. That's some of David Rosenberg and Rosenberg Research's best ideas expressed. It's only on the TSX. Talk to your advisor about that. But it's all built off of this model portfolio and the way that David's written about allocating assets for all these years. So that's really what we're going to dive into here. David, you're ready to take a top-down view of some of the crazy stuff. Markets are a little wild right now, I think.

What are you watching this week? We're coming into the Fed meeting. This is the 16th of September 2026, early in the day.

David Rosenberg (1:59)

Well, this is where I think that we could probably get a very nice re-entry point into the beaten down and maligned and detested Treasury market.

And I say that because the expectations in the market for the Fed, and I'm taking my life in my hands because this is before the FOMC meeting. But you remember just in March, and this was already after the war started, the dot plots, now I've got to say that I've always thought the dot plots were a bit of a joke. But the markets look at it and the fact that Kevin Warsh doesn't like to give guidance. He does do body language and tone, because it seems like whenever he opens his mouth, the 10-year Treasury note yield manages to go up six basis points. But you go back to March, and the dot plots are calling for a rate cut by the end of this year.

The money market and futures contracts are accepting of that. And then, on June 17th with Kevin Morse, we see a pretty significant pivot, where the dot plots now showed a rate hike for the end of this year. And what have the markets done? The markets have gone and basically discounted almost two rate hikes by the end of this year. So it's going to be interesting to see what the dot plots are going to do. The dot plots actually counter-intuitively maybe, or ironically, are more important now, because Kevin Morse does not like to give guidance like his predecessors did. So it means the dot plots, even though he doesn't submit one, they matter. They may matter the most more than anything else. But what's doubly interesting is next year, because when you go back to the last time they did these projections, the Fed was basically saying, well, we're going to have the funds rate at, call it 3.6, 3.8% for next year, for the end of next year. But the bond market's gone and priced in 4.5% just about for the funds rate for the end of next year. So the markets have gone completely manic and the pendulum has swung wildly where you did have the Fed dot plot at one rate cut back in March. The market back then thought they might cut twice. And so the Dr. Jack Lamister Hyde maybe hasn't really been the Fed as much as it's been the market. So I think that if those dot plots don't move today, they don't move that much, I think that you can get a nice bull steepener in the treasury curve. And that's why in this rosy model portfolio, we do have exposure to 2s, which where are they now? They're basically at least 4.5%.