Yardeni ‘Not Convinced’ 5.25% Is the Top in Yields

Does this mean that at at this point, if something might break or there are signs that at least the broader risk appetite is waning or at a pretty, accelerating clip, does that make you bullish bonds? We heard from Jim Bianco yesterday that he is getting bullish for the first time in years just based on this technical retracement. I I would say that, bonds, yielding 5.25%, are very attractive, you know, certainly on a ten year basis. The good thing about bonds is if you just hold them, you'll get you get your money back and you get the yield. And I think, again, five and a quarter is a pretty pretty good yield, but it doesn't feel like this is necessarily the peak in bond yield. I think even Bianco said that we we might find that we can get even better yields if we just kinda kinda wait here. So I'm not convinced that five and a quarter percent is necessarily the top in yields. I was thinking that that that was the case, but I think but I'm I'm increasingly wondering whether the unwind of the yield curve trade is a big problem here. This kind of I just recently wrote actually last night that this might be the revenge of the bond vigilantes. The bond vigilantes were suppressed from the great financial crisis to the great virus crisis with quantitative easing and zero interest rates. And now that they've been sort of liberated and free to express an opinion, they're saying, well, you know, you accumulated all that debt, at near zero interest rates back then. Now you're gonna have to refinance it at these yields, and that's that's concerning. I looked at it this morning. You called it invasion of the bond vigilante algorithm. So how high, Ed, do you think yields can actually go? Well, I I know. I think more and more people people are thinking about the possibility of getting closer to 6%. I I would say five and a half percent. I'm not I'm I'm not getting into the alarm stage here. I I think we are gonna find lots of buyers as at at these kind of kind of levels. The same thing happened in 2023 when the bond yield got to 5% very quickly. We saw that the auctions actually started to go very well, and then bond yields actually declined because inflation moderated. This is not exactly the same scenario right now. One of the reasons I I turned more cautious in mid September is because of what's going on in The Middle East. Higher for longer oil prices means stickier inflation means that central banks are not in a one and done mode, but are in a tightening mode, and that in turn is pushing up bond yields. So I I think that the the good and the bad news is that the repricing in the bond market's occurring pretty rapidly. It that that's hurts in the shorter shorter term. But to the extent that we get to where the terminal rate is for the bond yield, that that will be helpful.