The Bond Market Strikes Back

Liz Ann Sonders and Collin Martin discuss an environment shaped by inflation still above the Federal Reserve's 2% target, rising long-term Treasury yields, fiscal concerns and renewed trade tensions. They examine forces keeping inflation elevated — energy prices, tariffs and investment tied to the AI boom — and assess Treasury Secretary Scott Bessent's efforts to influence long-term rates after yields surged, framing them as a short-term response to debt and deficit pressures. The episode closes with a look ahead to Jackson Hole, labor market reports and purchasing manager surveys.

1. Inflation continues to show price pressures well above the Federal Reserve's 2% target, though wage growth is not described as the driver.
2. Energy prices, tariffs and investment required to support the AI boom are cited as forces keeping inflation elevated.
3. Bessent's efforts to influence long-term rates after yields surged are characterized as understandable but a short-term response to growing debt and deficits.
4. The hosts say managing yields addresses symptoms rather than causes, and note potential tension with a Fed that may prefer tighter financial conditions.