Markets Weekly September 26, 2026
The host argues that the sharp rise in bond yields reflects markets pricing in a more hawkish Fed path amid persistent inflation concerns and an energy shock, rather than US deficits, strong growth, or AI-related Treasury crowding out. He also discusses political risks surrounding the Iran war and midterm elections, concluding that markets could react sharply to developments but that the outlook remains uncertain.
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The host says 10-year and 30-year Treasury yields have surged to levels not seen in decades, while 30-year TIPS real yields are about 3.2%, also near multidecade highs.
The host says markets are pricing in an additional 25-basis-point hike and a higher-for-longer policy path, pushing the yield curve upward.
The host argues that employment data and economic growth have held up, while rising energy prices are increasing market concern about inflation and a more hawkish Fed.
The host says rate cuts would require signs that inflation is coming down, which could come from weaker equity markets reducing wealth-effect demand or from a Middle East resolution that lowers energy prices.
The host rejects the claim that high US deficits explain the yield rise, arguing that rising yields in fiscally responsible Germany point to a global factor tied to the energy shock and inflation.
Intro
The host notes that long-term and real yields have surged while equities, credit spreads, emerging-market assets, and gold have barely reacted, and attributes the move to markets pricing a more hawkish, higher-for-longer Fed path.
Why Yields Are Surging
The host argues that the global energy shock and persistent inflation—not U.S. deficits, unusually strong growth, nominal GDP, or AI-related Treasury crowding out—best explain rising yields.
Bad bond stories
The host examines Trump’s warmer engagement with China alongside uncertainty over Iran war negotiations, noting that oil supply and diesel remain key concerns.
Political pressure mounting
The host says worsening Republican polling raises the stakes around the Iran conflict and midterms, while markets remain positioned to buy dips; political and economic outcomes are still uncertain.
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Not Investment Advice: For education only — not financial, tax or legal advice.
AI-Generated: Made by AI from source transcripts and may contain errors.
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