Thanks MAGA for your genius economic policies. Thanks MAGA for your genius economic policies. Thanks MAGA for your genius economic policies. Thanks MAGA for your genius economic policies. Thanks MAGA for your genius economic policies.
And what mechanism do you expect that to be via? Just vibes?
There’s no inherent connection on yields to oil pricing, of course the obvious suggestion is this is inflationary pressure but that’s clearly not true as one can observe break even pricing and see that there’s almost no heightened inflation expectation built in to the yield surge across the last 12 months.
In fact, the current inflation priced in to the 10yr is exactly where it was a year ago, and at most 10bps above its lower bounds over the summer.
What is happening is a systemic crowding effect tied to debt issuance (both sovereign and private), coupled with duration hedging in the corporate space further driving long rates up.
You couple that with the multi year trend towards heightened investment and away from the 2010s era savings glut conditions, and you get systemic pressure in yields, specifically at the long end of the curve.
You can see this in the composition of yields, it’s almost entirely the heightened demand for real return.
I have zero interest in moderating anything on Reddit lol.
And who knows, much smarter people than me have bankrupted themselves trying to forecast fixed income markets. I think in general yields will likely be structurally higher than the 2010s for some time, but also the crowding issues tied to AI build outs should subside a bit.
For the US specifically I doubt we’ll get spending under control, so risk associated with treasuries isn’t likely to subside any time soon, but as noted above this surge is global, not just treasuries.
The neo-liberal order was always going to wind up somewhere near here, and the massive orgy of debt destroying the country to pay for tax cuts to the rich is also easy to predict from the self-interest (short term) of the rich. The logic of capitalism doesn't leave any other real options long term.
Trump is particularly stupid, which is one reason that you're seeing so much collapse under him - he's too stupid to even lie well.
I mean, the truth is that the current conditions in the bond market are a lot more complex than "it's all Trump's fault". There's certainly plenty of blame on Trump, but there's just a lot more going on.
In general we've seen a global shift away from saving and towards investment, in the economic sense, this results in less capital flowing towards debt, and long term debt specifically. At the same time AI infrastructure build outs coupled with expanding federal deficits is creating a lot of crowding out effects within fixed income. Hence yields increasing.
Interestingly, many here point to inflationary pressures, but that's not it, as you can see TIPS spreads remaining relatively stable across time. Most of the increase in long term yield isn't expectation of inflation, it's actual structural demand for higher returns in that space. Call that risk premia or call it a change in the risk free rate, but it's still heightened return expectation.
Did AI companies run out of cash the last few months and had to borrow all of a sudden? I can see why risk premium / credit spread on AI credit would increase, but for the risk-free rate to increase so much... why? Government bailout expectation?
If not, then something about government bonds themselves has broken.
I mean, it can also be risk premia, but it’s everywhere.
Realistically dollars have been flowing away from savings for a bit, AI coupled with government spending is just also creating a lot of crowding right now.
deranged unqualified trump cabinet not understanding how the US got its wealth and dismantling 70+ years of global influence and stability because "America first"
In the case of the US I assume you think tax cuts for the wealthy and wars abroad are social programs? Because that's where the US debt comes from. We don't HAVE social programs to speak of in this country.
Medicare Medicaid and social security are about half of the federal budget. Those are social programs
Also the muh tax cuts argument is dishonest. It presumes the same growth that occurred in America would have happened with higher taxes. Look at Europe over the same time period for what higher taxes over the same time period did to growth
Europeans are overall much more satisfied and happier in their lives than Americans are. All that growth doesn't do anything for the average American, because its all hoarded by the capitalist class even though the worker generates the value.
The Europeans who are facing the same debt issues America is and will have to cut those social programs you say make them happier and more satisfied? Those Europeans?
What social programs were being funded with debt and deemed unsustainable due to that "fact" that you just invented?
Our (already underfunded) social programs were being sustained perfectly fine until checks notes trump cut all the funding from them and still raised the deficit and debt.
A ponzi scheme is an investment fraud where old investors are paid out with money from new investors without their knowledge under the guise that their investments are actually growing. The fraud is important, otherwise its just like a covered call etf doing a return of capital.
Could you explain how social is Ponzi scheme?
Also, if don't talk like a sullen teenager people will generally treat you better amd take you more seriously.
Relevant quote: “scheme requires a continual stream of investments to fund higher returns, if the number of new investors slows down, the scheme collapses as the operator can no longer pay the promised returns”
A Ponzi scheme is a kind of pyramid scheme. It inevitably breaks because it requires infinite population growth to function.
It requires a growing number of new ‘investors’ to pay out the existing investors. These new investors become existing investors who need a larger group of new investors to come along to to pay the existing investors. Which requires an even larger group of new investors to pay the existing investors. And this cycle continues until it becomes impossible to sustain and breaks because it requires infinite growth of new investors
In terms of social security existing workers pay for retirees. This is not one to one. You need several workers to fund one retiree. Back when family’s had 8 children you could make this math work. Population growth has stalled. There are not enough new ‘investors’ to fund the aging population of retirees and soon to be retirees
Social security is a program built on an illegal system. Which was made illegal because for simple mathematic reasons of the impossibility of infinite growth it eventually breaks and screws over the people who rely on it
I would hope we could discuss this from an economic perspective rather than a political one. There are countries with both left-wing and right-wing governments caught up in this bond market collapse and the consequences could be quite dire going forward.
I’ve been following this for some time, and what I’m really curious about is the multi-party concerns… that is, how the British fixed income movements effect EU fixed income vs, say, Japanese fixed income. The multi-variate nature of a crisis like this seems very difficult to forecast.
thursdaysocks | 6 hours ago
Thanks MAGA for your genius economic policies. Thanks MAGA for your genius economic policies. Thanks MAGA for your genius economic policies. Thanks MAGA for your genius economic policies. Thanks MAGA for your genius economic policies.
flbnah | 6 hours ago
You don’t even KNOW how hard the markets are gonna rip once we deal with LA & San Diego
emersond70 | 6 hours ago
THAT’S how Trump‘s going to use the military to fix the economy.
Genius! 🤪
Qeltar_ | 6 hours ago
But look how high yields are! They were never this high under Biden!
The line is going up because America is becoming great again!
AltForObvious1177 | 6 hours ago
Explain why this is happening in every country
DouglasRather | 5 hours ago
Because when the US sneezes the whole world gets sick
ynotfoster | 5 hours ago
Oil prices.
Constant-Plant-9378 | an hour ago
The oil shock caused by Russia's invasion of Georgia is what precipitated the 2008 Great Recession.
Feels like history repeating.
DFW home foreclosures are already up over 40%.
RIP_Soulja_Slim | 3 hours ago
Oil prices are the reason long term yields are up everywhere? Come on lol.
stuntondeezh0es | 2 hours ago
You could easily google this and find out that it’s true
RIP_Soulja_Slim | 29 minutes ago
See my comment here: https://www.reddit.com/r/Economics/s/KBQSM0JJFN
I’m not sure what you think would come up at the end of a google search, do you mind expanding? Be as technical and specific as possible.
Picks6x | 2 hours ago
Literally yes lol
RIP_Soulja_Slim | an hour ago
And what mechanism do you expect that to be via? Just vibes?
There’s no inherent connection on yields to oil pricing, of course the obvious suggestion is this is inflationary pressure but that’s clearly not true as one can observe break even pricing and see that there’s almost no heightened inflation expectation built in to the yield surge across the last 12 months.
In fact, the current inflation priced in to the 10yr is exactly where it was a year ago, and at most 10bps above its lower bounds over the summer.
What is happening is a systemic crowding effect tied to debt issuance (both sovereign and private), coupled with duration hedging in the corporate space further driving long rates up.
You couple that with the multi year trend towards heightened investment and away from the 2010s era savings glut conditions, and you get systemic pressure in yields, specifically at the long end of the curve.
You can see this in the composition of yields, it’s almost entirely the heightened demand for real return.
Some relevant reading:
https://www.dallasfed.org/research/economics/2026/0210-searls-aifinancing
https://www.apollo.com/wealth/insights-news/insights/daily-spark/from-a-savings-glut-to-a-savings-shortage
https://fred.stlouisfed.org/series/t10yie
motorbikler | an hour ago
Where do you think this ends?
Also, why are you not a mod here?
RIP_Soulja_Slim | an hour ago
I have zero interest in moderating anything on Reddit lol.
And who knows, much smarter people than me have bankrupted themselves trying to forecast fixed income markets. I think in general yields will likely be structurally higher than the 2010s for some time, but also the crowding issues tied to AI build outs should subside a bit.
For the US specifically I doubt we’ll get spending under control, so risk associated with treasuries isn’t likely to subside any time soon, but as noted above this surge is global, not just treasuries.
a_library_socialist | 5 hours ago
which countries didn't join in the orgy of debt issuance in 2009 and 2020?
AltForObvious1177 | 5 hours ago
So you're saying this was a global pattern and not just one party in one country at fault?
a_library_socialist | 4 hours ago
Me? Yeah, Trump is a symptom, not the disease.
The neo-liberal order was always going to wind up somewhere near here, and the massive orgy of debt destroying the country to pay for tax cuts to the rich is also easy to predict from the self-interest (short term) of the rich. The logic of capitalism doesn't leave any other real options long term.
Trump is particularly stupid, which is one reason that you're seeing so much collapse under him - he's too stupid to even lie well.
AwesomeWhiteDude | 5 hours ago
The current US admin is responsible for this whole situation kicking off right now tbf
RIP_Soulja_Slim | 2 hours ago
I mean, the truth is that the current conditions in the bond market are a lot more complex than "it's all Trump's fault". There's certainly plenty of blame on Trump, but there's just a lot more going on.
In general we've seen a global shift away from saving and towards investment, in the economic sense, this results in less capital flowing towards debt, and long term debt specifically. At the same time AI infrastructure build outs coupled with expanding federal deficits is creating a lot of crowding out effects within fixed income. Hence yields increasing.
Interestingly, many here point to inflationary pressures, but that's not it, as you can see TIPS spreads remaining relatively stable across time. Most of the increase in long term yield isn't expectation of inflation, it's actual structural demand for higher returns in that space. Call that risk premia or call it a change in the risk free rate, but it's still heightened return expectation.
zeugma_ | an hour ago
Did AI companies run out of cash the last few months and had to borrow all of a sudden? I can see why risk premium / credit spread on AI credit would increase, but for the risk-free rate to increase so much... why? Government bailout expectation?
If not, then something about government bonds themselves has broken.
RIP_Soulja_Slim | an hour ago
I mean, it can also be risk premia, but it’s everywhere.
Realistically dollars have been flowing away from savings for a bit, AI coupled with government spending is just also creating a lot of crowding right now.
Spezalt4 | 5 hours ago
Decades of debt spending on unsustainable social programs in basically every democracy
Chezzymann | 3 hours ago
deranged unqualified trump cabinet not understanding how the US got its wealth and dismantling 70+ years of global influence and stability because "America first"
Individual-Nebula927 | 3 hours ago
In the case of the US I assume you think tax cuts for the wealthy and wars abroad are social programs? Because that's where the US debt comes from. We don't HAVE social programs to speak of in this country.
Spezalt4 | 2 hours ago
Medicare Medicaid and social security are about half of the federal budget. Those are social programs
Also the muh tax cuts argument is dishonest. It presumes the same growth that occurred in America would have happened with higher taxes. Look at Europe over the same time period for what higher taxes over the same time period did to growth
Individual-Nebula927 | 2 hours ago
Europeans are overall much more satisfied and happier in their lives than Americans are. All that growth doesn't do anything for the average American, because its all hoarded by the capitalist class even though the worker generates the value.
Spezalt4 | 2 hours ago
The Europeans who are facing the same debt issues America is and will have to cut those social programs you say make them happier and more satisfied? Those Europeans?
Spam_Hand | 5 hours ago
What social programs were being funded with debt and deemed unsustainable due to that "fact" that you just invented?
Our (already underfunded) social programs were being sustained perfectly fine until checks notes trump cut all the funding from them and still raised the deficit and debt.
Spezalt4 | 5 hours ago
Social security is a literal Ponzi scheme.
Caracalla81 | 3 hours ago
Are there any services that are not funded by contributions? Do you consider public schools to be a ponzi scheme?
Spezalt4 | 2 hours ago
Are you mental? Public schools do not require 8-10 new children to come in to fund the existing children like a Ponzi scheme does.
Do you know what a Ponzi scheme is? Can you define it?
Individual-Nebula927 | 2 hours ago
Apparently you don't know what a ponzi scheme is, and a redistribution program by a government doesn't meet that definition.
Spezalt4 | 2 hours ago
So the answer to my question is no you don’t know what it is and cannot define it lmao
Here, some required reading: https://en.wikipedia.org/wiki/Ponzi_scheme
Caracalla81 | an hour ago
A ponzi scheme is an investment fraud where old investors are paid out with money from new investors without their knowledge under the guise that their investments are actually growing. The fraud is important, otherwise its just like a covered call etf doing a return of capital.
Could you explain how social is Ponzi scheme?
Also, if don't talk like a sullen teenager people will generally treat you better amd take you more seriously.
Spezalt4 | an hour ago
https://en.wikipedia.org/wiki/Ponzi_scheme
Relevant quote: “scheme requires a continual stream of investments to fund higher returns, if the number of new investors slows down, the scheme collapses as the operator can no longer pay the promised returns”
A Ponzi scheme is a kind of pyramid scheme. It inevitably breaks because it requires infinite population growth to function.
It requires a growing number of new ‘investors’ to pay out the existing investors. These new investors become existing investors who need a larger group of new investors to come along to to pay the existing investors. Which requires an even larger group of new investors to pay the existing investors. And this cycle continues until it becomes impossible to sustain and breaks because it requires infinite growth of new investors
In terms of social security existing workers pay for retirees. This is not one to one. You need several workers to fund one retiree. Back when family’s had 8 children you could make this math work. Population growth has stalled. There are not enough new ‘investors’ to fund the aging population of retirees and soon to be retirees
Social security is a program built on an illegal system. Which was made illegal because for simple mathematic reasons of the impossibility of infinite growth it eventually breaks and screws over the people who rely on it
Caracalla81 | an hour ago
So if you don't believe that fraud is essential to the definition do you believe all public services are Ponzi schemes? Why not?
adorablefuzzykitten | an hour ago
Remove the current cap imposed by the GOP and the Ponzi scheme becomes a fully funded safety net for all seniors.
Particular_Music_270 | 3 hours ago
Fluoride is literally turning the frogs gay
cvr24 | 6 hours ago
You haven't figured out that greatness can only be achieved when you stand alone?
ProfessorSmoker | 2 hours ago
The globalist economy can burn in a fire forever.
scoofy | 2 hours ago
I would hope we could discuss this from an economic perspective rather than a political one. There are countries with both left-wing and right-wing governments caught up in this bond market collapse and the consequences could be quite dire going forward.
I’ve been following this for some time, and what I’m really curious about is the multi-party concerns… that is, how the British fixed income movements effect EU fixed income vs, say, Japanese fixed income. The multi-variate nature of a crisis like this seems very difficult to forecast.