Schroeder: The signs of weakness in the US economy should not be ignored, and the long-term decline in US Treasury bonds is unsustainable.

GMTEight Source, despite betting on long-term US treasuries due to the strong US economy, has seen unexpected results. However, for those who stick to their positions, the day of celebration is coming. Schroders analyst Sebastian Mullins believes that despite recent positive data, the US economy is showing signs of weakness. He is buying bonds in Australia and Europe and looking for an entry point to buy longer-term US treasuries. Furthermore, he points out that in the current economic situation, people may be misled by the surface phenomena of inflation and consumer growth, thinking that the economy is in good shape. However, he emphasizes that the actual situation is that actual growth is lagging behind people's expectations. Additionally, he mentions that there have been some minor issues in the labor market. But the consumer's situation is crucial for the direction of the US economy. Therefore, they are closely monitoring consumer trends. Betting on long-term treasuries is a high-risk strategy as strong retail sales and a resilient job market indicate that US economic data is still stabilizing. The Federal Reserve has also hinted at an open attitude towards further interest rate hikes, which increases the risks for those betting on loose policies starting next year. Mullins co-manages two investment portfolios for Schroders in Sydney, which is responsible for managing a multi-asset strategy valued at AUD 5 billion (USD 3.2 billion) in Australia. He is not the only one predicting serious troubles for the world's largest economy. Investment firms Jupiter Asset Management and Vantage Point Asset Management also hold the same view, and the recent trend in the US bond market has further strengthened this belief. In August, the yield on 30-year US treasuries rose by about 40 basis points to 4.40%, reaching its highest level since October last year. Strong economic data, a large supply, and Fitch's downgrade of the US credit rating have exerted pressure on interest rates. Mullins says that based on the current situation, he may buy longer-term assets in the portfolio to cope with economic downturns. At the same time, he is keeping cash on hand to enter the stock market when it is about to decline. Currently, he is using options to manage macro risks and stock volatility, and believes that range trading is a more feasible strategy.