Nobody taught us how bonds work in school, so I am going to teach you today, because the 30 year Treasury bond just hit a 19 year high and almost nobody is talking about it.
I am broadcasting from the producer chair and breaking down the one signal that cannot be spun by either party. The bond market. I walk you through what a bond actually is, what a yield actually means, how the Dutch auction sets the rate, and why when these long term bond rates climb, your mortgage rate climbs right along with them. I draw the whole thing out on the whiteboard so it finally makes sense.
Here is why it matters. The 30 year is sitting at 5.26%, higher than it was right before the 2008 crash. Our interest on the debt is now over $1.1 trillion a year, more than the defense budget. The Strategic Petroleum Reserve just fell to its lowest level since 1983 in its 18th straight weekly decline. And the Iran war keeps choking off oil, which pushes inflation, which keeps bond investors demanding higher yields because inflation is theft and they know it.
I also break down Kevin Warsh's latest Fed meeting where a single sentence about there being no soft inflation target moved both the stock and bond markets in under an hour. I close with exactly what I am doing with my own money in an economy that is telling us inflation is here to stay.
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