Bonding Over Bonds: A Fed Hike, 20-Year-High Yields, and Why the Starting Point Matters

Victory Capital portfolio specialist Ally Krautheim interviews Victory Income Investors CIO Jim Jackson about the rise in intermediate-term bond yields to their highest level in more than 20 years, following the Fed's September rate increase and firmer inflation readings. The discussion sets out the drivers the guests believe are behind the move, and the ones they say are not, and contrasts today's starting yield level with where fixed income stood a decade ago.

1. Intermediate-term bond yields reached their highest level in more than 20 years, and the Fed raised rates in September after higher inflation readings.
2. Markets are pricing additional hikes for the rest of this year and into next year, while growth has stayed robust and employment fairly stable.
3. The guests argue long-term inflation expectations and the federal deficit are not the primary drivers of the yield move.
4. They point instead to expectations of further Fed hikes, strong growth lifting real rates, and AI-related capital spending competing for each additional dollar.