In this special release of Facts vs Feelings, recorded live at the Excell Conference 2026, Carson Group’s Ryan Detrick, Chief Market Strategist, and Sonu Varghese, Chief Macro Strategist, are joined by Ed Fitzpatrick, Managing Director and Portfolio Manager at JP Morgan, who leads the firm’s U.S. rates team and manages its largest core bond strategy. They dig into why the 10-year Treasury yield is sitting near 5% and whether it should be even higher, given nominal GDP growth running around 8%, an ISM manufacturing price index near 80, and an AI capex build-out that shows no signs of slowing.
From there, Ed explains why real yields have reset, why inflation expectations have stayed well behaved, and how the market has begun pricing in as many as four more Fed hikes after the first rate increase in three years. The group also covers the strong labor data behind the 4.2% unemployment rate, the growing role of SPVs in financing hyperscaler data centers, and the debate over whether AI will complement or replace workers, including a look at “surveillance pricing.”
The conversation wraps with the case for active fixed income, the bull market’s approaching fourth birthday on October 12, and why Ryan and Sonu still think the wave continues, along with a few lighter moments about Sonu’s soccer injury and the best scary movies for October.
[Key Takeaways]
● Sonu argues the 10-year yield could justify a much higher level given nominal GDP growth near 8%, but Ed notes inflation expectations remain well behaved and that markets are beginning to look past energy-driven pressures toward AI’s future productivity gains.
● Ed says the 10-year yield rising seven months in a row has happened only six times in the last 60 years, and that cracks may be showing in French debt, emerging markets, and swap spreads as yields push higher.
● The ISM manufacturing price index is near 80, with every commodity tracked in short supply and rising in price, much of it tied to the AI build-out. Markets are pricing in as many as four additional Fed hikes over the next 12 months.
● Sonu calls the labor market solid, pointing to unemployment at 4.2%, the prime-age employment-population ratio at 80.7%, and low layoffs. With immigration at a standstill, the economy needs far fewer jobs each month to keep pace.
● Hyperscalers are expected to need about $400 billion in financing, much of it through data center SPVs. Ed says these deals carry construction, regulatory, and structuring risk, which creates opportunities for active managers who can be selective.
● Ed expects AI to bring both job displacement and productivity gains, with productivity potentially disinflationary. Sonu counters that “surveillance pricing” could make AI inflationary instead.
● In September, 10 of 11 sectors were negative and only tech rose more than 5%, leaving the S&P 500 nearly flat. Ryan and Sonu say the bull market, almost four years old, can run longer, but that avoiding a wipeout matters more the longer it goes.
Jump to:
0:00 – Welcome And Introducting Ed Fitzpatrick
3:37 – Why Not Seven Percent Yields
8:56 – Tech Or Bust Versus Jobs Data
12:50 – Resilient Economy And Rate Shock
15:20 – Fed Policy In An AI Capex Boom
18:27 – Active Bond Management And SPVs
21:51 – A Quick Detour Into Culture
23:30 – AI Jobs Debate And Pricing Power
30:43 – Riding The Bull Market Wave
34:24 – Active Fixed Income ETFs And Closing
Connect with Ryan:
• LinkedIn: https://www.linkedin.com/in/ryandetrick/
• X: https://x.com/RyanDetrick
Connect with Sonu:
• LinkedIn: https://www.linkedin.com/in/sonu-varghese-phd/
• X: https://x.com/sonusvarghese?lang=en
Questions about the show? We’d love to hear from you! factsvsfeelings@carsongroup.com
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