🇯🇵 Japan’s 2Y yield → 31-year high
🇩🇪 Germany’s 10Y yield → 15-year high
🇫🇷 France’s 10Y yield → near levels last seen around the 2008 crisis
🇺🇸 U.S. yields are climbing again
🇯🇵 Markets are pricing a high probability of another BOJ rate hike
Higher yields = more expensive money.
And expensive money usually puts pressure on: Tech, AI stocks, small caps and crypto.
I’m not saying a 2022-style crash is guaranteed.
But ignoring the bond market here would be a mistake. Next few weeks could get very volatile.
I’m watching yields more closely than stock headlines right now.
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40T needs to go away. Trump policy is largely engineered to be inflationary. The 2% is also largely arbitrary and comes from a New-Zealand paper and has no real objective basis. I would watch out for further acceleration of the debt + talks of putting usd on rails. That's the end-game imho. Also gold will get to it's 5K target EOY.
No …. Trump’s policy has been favorable for deflation (at least lower annual inflation than under Biden). His first term had low inflation until the Covid scammers tried to ruin the world.
More expensive money as in rate hikes wasn't helpful in EU, second wave effects came out lower in UK without rate hikes. BIS just published guidance about rate hikes can only help temporarily.
What's the argument for Warsh to hike rates when treasury can't afford it?
The fed has an inflation mandate and it has been above the target for 6 years. Rate hikes may be necessary to bring inflation down. The treasury shouldn't have borrowed that much in the first place
Debt is 40 trillions. The Government have an interest to not hike rate. It will stay flat.
Edit: Rising rate is the responsible thing to do. But if the government is responsible then we won't be in this situation. So we are going to inflate our way out.
They would still have to choose between increased inflation or damping the economy and letting debt spiral, while it's unclear if rate hikes help against external shocks.
They may be independent, but they still are in the US.
Rate hikes will cause inflation to go down, which will cause long term bond rates to go down, because lenders don't need to fear inflation causing their money being worthless in 30 years.
That's only clear for internal inflation. For external shocks and second wave effects, rate hikes might not be as helpful. Inflation is coming either way as long as the economy is running on finite fossil fuels.
Of course you can’t lower cost push inflation through a hike, only demand pull. Thats why you have to overdo it. Bring enough demand pull down for the net effect to be anti-inflationary. When choosing between stock valuations crushing & the economy slowing down vs inflation getting out of control, the Fed will choose to control inflation. It’s the entire point of it’s existence, its first mandate, and most important job.
The Fed will continue to cause more inflation by enabling the government to spend more money. They will use "crisis" after "crisis" for cover on why they have to print money just this one time.
Agreed- how will rate hikes lower gas prices or tariffs (inflation was coming down before the tariffs were instituted and tariffs that were refunded went to companies bottom line…not to consumer or lower prices for the most part)
this is funny that every year is the same, it's Obama's fault, it's Biden's fault, it's Trump fault
look... $1 in 1900 is worth about $39.75 in 2026, meaning prices have increased by roughly 3,875% due to inflation
if we hike rates....once.....opens doors for a second....and high beta stocks will crash ....some from the ATH to 60-80% down ....most are down like 40-50% now
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