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Bond Vigilantes Are Testing the New Fed Chair
Description
When Ed Yardeni says the bond vigilantes will force the Fed to hike rates in July, markets listen. In this episode, Lucas and Luna unpack the mechanics behind the recent sell-off in longer-dated Treasuries, the 4.57 percent ten-year yield that has traders rethinking the path of monetary policy, and what incoming Fed Chair Kevin Warsh inherits from a fixed-income market that is increasingly calling the shots. They look at the five-day jump of 25 basis points on the long bond — the ten-year has climbed from 4.32 to 4.57 percent this week alone — and ask whether the FOMC can hold steady at 3.64 percent when the bond market is pricing in a higher term premium. Specific numbers, one concrete mechanism (the term premium repricing), and a clear takeaway: the bond vigilantes are not a metaphor anymore.