Castle Investment Economist: The US economy is in a "fragile" balanced state.

Castle Investment's top economist Angel Ubide said that the US economy and labor market are in a fragile balance, and long-term US Treasury bond yields are a key indicator to judge whether this background is deteriorating. Ubide, head of fixed income and macroeconomic research at the hedge fund company, said in an interview last week, "The economy is on the good side of a fragile balance, especially in the labor market, but we are close to the edge." "Our economy has more or less resilience, the unemployment rate is still low, consumer health has not collapsed, and monetary policy tends to be loose," he called it "a satisfactory combination." Ubide said he is monitoring the 30-year US Treasury bond yield to assess economic trends. "Yields rising rapidly above 5% may pose a threat to risk assets," he said. Last week, the 30-year US Treasury bond yield approached 5%. When Ubide spoke last week, long-term bond yields were close to 5%, the highest level since mid-July. As data showed weakness in the US job market, traders fully digested the possibility of a 25 basis point rate cut at the Fed's meeting next week, causing the yield to plummet. On Monday, the yield on long-term bonds was about 4.7%. Ubide also discussed the outlook for the US dollar. The dollar has fallen about 8% this year due to concerns about the US fiscal outlook, economic and inflation concerns triggered by tariffs, and the Trump administration's efforts to pressure the Federal Reserve to lower borrowing costs. Ubide believes that the dollar may be in the early stages of a long-term decline. Since US President Donald Trump announced comprehensive tariffs on US trading partners in April, some investors have begun to diversify their dollar investments and hedge their dollar exposure, putting pressure on the dollar. He said, "Rebalancing dollar assets as a geopolitical hedge will take several years to complete. Large investors with substantial funds act more slowly."