Jim Bianco

7/8 Combined government and corporate interest costs are now 3.8% of GDP. This is the highest since 2008 but only slightly above the 65-year average of 3.5%, and well below the 1990 peak of 5.9%. https://t.co/1yMiXhMsQT 8/8 Why push back on debt levels as a driver of interest rates? Because way too many think debt is the MAIN driver of higher yields, interest costs are the burden, and the solution is financial repression such as yield curve control. This would be disastrous. If yields are MORE responding to higher economic growth and sticky inflation, as we have long been making the case, forcing interest rates unnaturally low (aka fin…

1/8 Is Too Much Debt the Reason Bond Yields are Heading Higher? -- My argument for why this case is overstated. (It's a problem, but a secondary one.) 🧵 https://t.co/zBzpq4Mada 2/8 Federal debt held by the public as a percent of GDP (blue) is expected to top 100% when the 2026 ratio is reported. The Congressional Budget Office (orange) expects this ratio to blast to a new high of 120% in the next 10 years. https://t.co/8f6tqTC9Ws 3/8 So, is the ever-increasing amount of debt above driving bond yields higher? We would argue the answer is largely no. And any response, such as yield curve control or other financial repression would not…

2/7 The Fed talk this week (Williams first then Jefferson) knocked down the probability of an Oct 28 rate hike (blue) from 70% on Mon to 25% Fri. Today's payroll "miss" (below expectations) worked for this narrative. But the 10-year yield (orange) did not follow. https://t.co/q1ovlrSEQ9 3/7 Wait! The 10yr yield depends on more than Fed prob. Maybe other things, like crude, drove it higher. I agree that crude matters. But over the last 3+ weeks, crude (green) is DOWN $2 while the 10yr yield (orange) is UP almost 40 bps. Yields are more than following crude. https://t.co/gZRDcV8dO0 4/7 Now see the 2yr yield (red) and the prob of a hik…

"Bond Traders can stop panicking when the Fed starts panicking." NY Fed Pres John Williams speech today (below) pushed the prob. of a down to hike to 44% (chart). Will this lack of Fed "panic" cause bond traders to "panic" bond yields higher? Check back Fri. after payrolls. https://t.co/K0NCOvWkK2

An inside look at future Treasury strategy meetings. https://t.co/jC3Zao8T85 https://t.co/vYPeIyfUUw

Stop me if you've heard this before. Trump: Iran called, and they really want to make a deal.

Rational Dissent Episode 010. Will the Bond Market End Humanity? With the 10-year Treasury yield hitting a 16-year high of 5.20%, is this a return to historical normal—or the start of a market break? Available on YT, Apple, Spotify, Overcast, etc. --- Chapters 00:00 - Introduction & Market Overview 03:01 - Analyzing the Week's Bond Market Frenzy 07:09 - Shifts in FOMC Rate Expectations 08:27 - Economic Growth and Potential GDP 13:30 - Historical Context: 5,000 Years of Interest Rates 17:04 - Economic Resilience vs. Market Fears 18:38 - Drivers of Yields: Growth, Energy, Policy, and Deficits 23:03 - The Fed's Dilemma Heading into October 26:…

Two weeks ago, AI was going to wipe out humanity. Now, 88% of the species will survive. Amazing improvement!

My question: "Will the bond market end humanity before AI?" This is the post of the week, if not the month.

August 15, 1971. President Nixon closed the gold window, effectively turning the US dollar into a fiat currency. Since that date, the 10-year yield has averaged 5.91%. It closed today at 5.18%, --- Maybe the bond market won't end humanity. https://t.co/uQci0si2oL

This is still shaping up to be the biggest story of the second half of October. If these probabilities hold, the market is DEMANDING a rate hike on October 28th, a week before the midterms. Trump will lose it, and Warsh will become the new Jay Powell. If these probabilities hold, it means the market has lost patience with the Fed's easy policy over the last two years, which is why long-term yields rose during a 2024 to 2026 easing cycle for the first time in 50+ years (see the repost below). If the Fed sits idle while the market prices in a rate hike, long-term yields could spike off the top of the page. Of course, payrolls, CPI, retail s…

Now 73% probability the Fed hikes on October 28, the week before the midterms. Can the Fed disappoint the market? (See below) https://t.co/k6lvmeAwM8

2/2 Remember when the Fed was cutting rates between 2024 and 2026 (orange), the 10-year yield rose (blue). This was the first time in 50+ years that a sustained cutting cycle saw long-term yields rise. I've argued this was a market message (maybe screaming) that the Fed was too easy. So, if the market continues to price in a hike for October 28, meaning it is still >50% after payrolls and CPI next month, and the Fed does not deliver a hike, does this pattern of reacting to a "too easy" by sending yields upward continue?

In December 1988, federal agents arrested 25-year-old Kevin Mitnick for stealing software from Digital Equipment. According to Mitnick's memoir, the prosecutor told the magistrate, "He can whistle into a telephone modem and launch a nuclear missile from NORAD." Three judges denied him bail and ordered him held in solitary confinement, where he stayed for eight months, according to Forbes. No human can produce a modem handshake with his mouth. And NORAD does not launch anything. It watches launch orders travel as authenticated messages. Firing requires two officers turning keys at the same moment, set too far apart for one person to reach b…

My data agrees https://t.co/wZMAsixJQK

Trump said this on the tarmac in North Carolina Wednesday night after the Fed hiked rates. Trump is telling Warsh how to vote???? And I told — I talked to Kevin and I said, “You might as well vote with the board because it’s not going to matter.” --- Verbatim transcript Trump: I’m relying on Kevin, but he’s got, you know, a very tough board. He’s got a board that was put there by a lot of other people, and the interest rates are too high. They’re not appropriate. And I told — I talked to Kevin and I said, “You might as well vote with the board because it’s not going to matter.” The board is very hostile. They’re very political. They’re d…

Rational Dissent Episode 009. Did the Fed Get it Right? Kevin Warsh delivered the first hike in a few years as persistent inflation bites; was it the right move? Available on YT, Apple, Spotify, Overcast, etc. --- Chapters 00:00 – Introduction & FOMC Rate Hike Overview 02:38 – Rising Bond Yields & Financial Conditions 08:02 – Structural Inflation & the Post-Pandemic Economy 24:10 – The 12–0 Vote & Threats to Fed Independence 29:10 – Eliminating Forward Guidance & Outro

Crossing this afternoon *FRANCE'S CREDIT RATING DOWNGRADED TO A+ FROM AA- AT SCOPE The U.S. credit rating is AA+ -- Trump will be upset because he thinks Sovereign (Government) yields are set by credit rating. The best credit rating gets the lowest yield. As the chart shows, France has had lower yields than the U.S. since 2013 (13+ years now) despite being a lower-rated credit, and now even lower. Better credit ratings getting lower yields works really well for junk-rated Atlantic City casinos (which he is an expert on), but not for government yields. Government yields are set on inflation expectations, growth outlooks, and borrowing amoun…

Anthropic is building a "wet lab" in the San Francisco Bay Area. -- Now it makes sense! The reason they are worried that AI will end humanity is that they are the ones who are going to end it with AI!!

1/3 There's a narrative that the Fed can't hike on October 28 because it's the week before the midterms. Somebody should tell the market because it's pricing the probability of an October 28 hike at 60%, and it is rising. https://t.co/2WGxwra5hK 2/3 If the market is pricing in a hike in late October and the Fed defies it by NOT hiking, remember this chart. For two years, the Fed (orange) was easy, and the market (blue) kept rejecting it by pushing long-term yields higher. This could repeat in late October. https://t.co/Df8G4UtIHG 3/3 I explained this on @BloombergTV this morning @FerroTV @lisaabramowicz1 @mckonomy https://t.co/ZcM4xS…

In 2018, when Powell was new and hiking rates, Trump said he was "a very good man" and, "I am not happy about it. But at the same time, I’m letting them do what they feel is best.” We know how that movie ended. Are we sure "this time will be different?" https://t.co/3D0OuPKq8B

I give JP Morgan credit for acknowledging this. Much better than making things up, like I'm sure a lot of others are doing.

Paging @donnelly_brent Both of these covers came out TODAY. Time to back up the truck and buy? https://t.co/mj2nC9M4aD

@HenrikZeberg I'll see your one-dimensional rebuttal and raise you with this one-dimensional counterargument! https://t.co/R0i7UTwiR3

@valentin_macro @HenrikZeberg Try this https://t.co/Hhg46u037Y

The Fed did not make a policy error yesterday by hiking rates. They ended a two-year policy mistake yesterday. Explained below.

1/3 The repost is correct. But the Fed adopted the PCE (orange) as its measure in 2000, not CPI (blue). Core PCE was 2.8% in Sept. 24 and was falling when the rate cuts began. It is now 3.3% and rising, as they started hiking. Viewed this way, hikes look more appropriate. https://t.co/YEj8s2pdFD 2/3 The gap between core CPI/PCE is the largest since 1985, when the BLS switched to measuring housing inflation using Owner's Equivalent Rent (OER) and Rents of Primary Residence (RPR) OER plus RPR ~40% of core CPI ~17% of core PCE This is all about housing weightings. https://t.co/95455ciIVj 3/3 Which one should the Fed use? The one the F…

Remember, the Fed voted 12-0 today (See repost below). So, when Trump wants to stop TALKING about cutting rates to less than 1% and start ACTING on it, the Fed set it up so Trump only has to threaten, pressure, or intimidate one person to make it happen. https://t.co/FOhEve7NUl

Stop saying "the Fed can't print oil." It's a lazy comment. Maybe, without a supply shock muddying the water, the Fed would have seen more easily that deglobalization ended goods deflation, which masked problematic services infaltion and hiked sooner. If so, long-term yields might be lower today, since bond traders could have stopped panicking sooner because the Fed started panicking earlier.

What did the Fed accomplish by raising rates today? For the first time in over half a century, a completed prolonged rate-cutting cycle produced HIGHER long-term interest rates. The market has been telling the Fed for 2 years that it had the wrong policy. They finally listened today.