The Bond Vigilantes have driven up Treasury bond yields recently, thundering onto the scene in alarm over the government’s huge borrowing needs, record corporate bond issuance, three inflationary supply shocks, a cloudy Fed path, resilient nominal GDP growth, a higher neutral interest rate, and a fragile yen. On the flip side, the Trump administration is determined to keep yields tethered—one way or another. Also holding yields in check are slightly cooler economic momentum, moderating labor costs, and the prospect of less policy uncertainty. Ed and Elias expect those counterweights to keep the 10-year yield mostly within our 4.00%-5.00% expectation range, the “old normal.” … Also: Ed reviews “Tuner” (+ + +).
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