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Have exposure to the $40 trillion swirling around in the U.S. bond market?

We thought so.

Here’s a simple investing relationship to help you risk manage your bond exposure: Accurately forecast the rate-of-change in U.S. inflation, and you’ll be able to more easily predict the future direction of bond yields.

It’s a simple relationship to understand, but harder to forecast, according to Hedgeye CEO Keith McCullough.

“The number one predictor of getting the bond market right is getting inflation right on a longer-term inflation expectations basis,” McCullough explains in the clip above.

“If you have the proper forecast, you would make a lot of money and certainly save a lot of money in getting away from certain things like being short bonds."

Watch the full clip above to watch McCullough explain how to risk manage this correlation – and “take advantage of the herd.”

McCullough: Get Inflation Right, You Get The Bond Market Right - early look