Asset inflation is often fueled by abundant money supply, which is why Wall Street incessantly clamours for it at the lowest interest rate possible in order to maximize its arbitrage

Asset inflation is a sustained, nominal increase in the market prices of financial and capital assets—such as stocks, bonds, real estate, gold, and derivatives—rather than everyday consumer goods and services.

Unlike consumer price inflation, asset inflation is not tracked by the Consumer Price Index (CPI) and is not a component of Gross Domestic Product (GDP). 

It is often fueled by low interest rates, abundant money supply, or cheap corporate and investor borrowing rather than direct production increases.

Rising asset values increase household net worth for owners (particularly higher-income groups), which can indirectly drive spending and fuel broader economic pressures.

Because asset prices can disconnect from underlying economic fundamentals or production capacity, sharp run-ups frequently carry the risk of a market correction or crash.

Just because it's a Tuesday, a lousy Tuesday.

 

 

  

 

5Y-30Y not buying today's Fed pause

But Kevin Warsh was damned if he hiked, and damned if he didn't, because of the election next week.

 

The recovery in road travel from the Great Recession peaked in October 2016, and it's been all downhill from there

The Great American Bond Market has sucked since Trump became a politician, and road travel seems to agree.

The moving 12mo total vehicle miles traveled chart is yoy monthly through August 2026. The 10Y chart is rolling 10Y annualized total returns through September 2026, setting a record low in the entire history of the country.

 

 

 

Strong dollar at 102, gold holding above $4k, long USTs in the 5s, stocks holding near all-time highs, 10-year inflation expectations 2.36% lol

So, it's not 2022 anymore.

 

If there's a better metaphor for Trump's Golden Age I don't know it: Bonds have been at their very worst in the whole history of the country ever since Donald J. Trump entered politics

 Sep 2016-Sep 2026: -2.23% per annum nominal.

Compare VUSTX discussed in a previous post: 10-year total return per annum through 9/30/26 at -2.20%.

It's eerie.

Anyway yields at 5+% now portend better times ahead for good old American bonds, eventually.

 

If Republicans were smart they'd run on SPX hard for the remainder of the campaign because it's all they've got

 S&P 500 rises to record high as oil and yields move lower

Yields aren't significantly lower, oil is $88 and $98, and USA gasoline is $4.32.

 

 

VUSUX new NAV low 9/30/26 $7.13 (October 31, 2023 $7.44)

VUSUX per annum return 5-years -7.25%

VWESX per annum return 5-years -4.33% (NAV $6.90 vs. $6.94 October 31, 2023)

Meanwhile, checking in on the 60/40 portfolio . . . 

VTSAX per annum return 5-years +12.55%

VBTLX per annum return 5-years -0.65%  

There are certain things one just should not be buying at certain times

In April 2020 the 30Y was paying just 1.27% on average (tonight it pays 5.56%).

Core CPI inflation was 1.43% yoy in April 2020.

Silver was $15. It's now up 307%.

Gold was $1,700. It's up 144%.

WTI averaged $16.55. It's up 480%.

SPX averaged 2,762. It's up 179%.

The median sales price of a new home is up 30%. 

Imagine needing to sell a 6-year old 30Y you bought in a flight to safety during the pandemic panic and booking a loss of 57%. 

 

C'mon man, the Fed has bought trillion$ in U.S. Treasury securities and can't keep yields down, how is the Treasury buying billion$ going to do anything?

This is nothing but another gimmick in a long line of gimmicks, brought to you by the unserious.

Serious governments attack high interest rate problems by cutting spending and raising taxes. 

Neither American political party has had the courage to do those things in decades because Democrats demand endless spending to reduce endless poverty and Republicans demand endless tax cuts to stimulate endless lousy economic growth. 

 Bessent’s political turn in GOP speech tests his bond-market credibility

... His speech comes against the backdrop of the Treasury Department on Wednesday saying it would buy back as much as $6 billion in long-term Treasury debt this week, with a cap of at least $4 billion in operations later this year. The department began the buyback program in 2024 to solve a well-documented problem where trading can be thin for some long-term debt. ... 

10Y yield at this hour is 4.92%.

20Y is 5.36%.

30Y is 5.351%.

And 2Y is at 4.514%, a 52-week high like the rest. 

ECB playing catch up to reality, as always

 ECB hikes interest rates to 2.5% as policymakers see risk of higher inflation, weaker growth

... Eurozone inflation hit 3.3% in August, with energy inflation spiking to 14.3%. ... 

10Y yields at this hour:

Germany 3.4777%

France 4.382%  

The stuff you see on Drudge is just a joke

 

Drudge and more importantly the Washington Examiner should be ashamed of themselves for putting up this crap. 

 The Iran war and $40 trillion debt just made Chinese bonds look safe

by William Nye, student and columnist from Australia

 

Yeah, Chinese bonds look so safe that China itself owns TWO TIMES MORE UST than foreigners hold of China's own goddam government bonds, and both sums are tiny little dwarfs compared with the $40 trillion U.S. government debt market.

Foreigners own $0.2962 trillion of Chinese government debt as of mid-2026.

China in June owned $0.6334 trillion of U.S. government debt at the very same time.

Meanwhile foreigners altogether owned $9.299 trillion of U.S. debt in June.

Bonds are only as good as the people backing them and as good as the government which can tax them to pay them off.

Individual median disposable income in the United States in 2023 was more than EIGHT TIMES higher than in China at $38,110 compared with China at $4,588.

In America tax compliance on wages and salaries is nearly 100%.

In China you need to roll out the tanks. 

Stupid people read these stupid headlines and stupid articles and stay stuck on stupid.

Too often that leads to getting stuck to the pavement. 

 

This blatant political interference with the full faith and credit of the United States by the president should be condemned by everyone

 Trump doubles down on threat to halt trade with top partners unless Fed cuts rates

When yields were hopeful about federal spending cuts from DOGE and federal revenue increases from tariffs

"Fiscal discipline" from Mad King Ludwig: 

Trump is too stupid to take the win handed to him by +162k payrolls in August

  New York Fed’s Williams says yield surge due to strong economic prospects

Analysis: Lower Treasury yields could require a weaker economy. Trump won’t fix them 

... The rise in real yields is “more of a reflection of the strength of the economy,” New York Federal Reserve President John Williams told CNBC Wednesday. Some people want to read the rise in yields as dragging on the economy, but that logic is backward, he said. 

“It’s not really about financial conditions affecting the economy. It’s more about the economy affecting financial conditions,” Williams said.  

The flip side of Williams’ analysis is that it may take an economic slowdown for borrowing costs to cool. But that isn’t a solution anyone would want to root for.

 

10Y yield at 4.64% and 30Y at 5.16% is good actually

 

Mad King Ludwig blows another gasket

 Trump tells Fed to slash rates or he’ll end trade with countries with U.S. surpluses

If ever an act deserved the hook, this is it.

 

 

 

The nerve of these people

The rate cut in September 2024 was the real disaster because inflation was not licked, and yields now have simply retested their highs after some hopeful but ultimately failed signs of spending discipline around DOGE and of increased revenue from tariffs.   

The failure to win in the Persian Gulf just compounded the inflation problem, restoring the status quo ante, and then some. 

The Fed is the one needing the help, but it isn't going to get it from a spendthrift Congress and reckless executive branch. 

 Vance says Fed should lower interest rates: ‘Would be nice to have some help’ 

 

Yields on Japan 10Y and UK 30Y haven't been this high since 1996-1997

 

Bond yields and oil wars and inflation, oh my!

Global bond yields soar to multi-decade highs as Middle East turmoil reignites inflation fears

 

10-year yield hits highest since January 2025 as higher oil prices stoke inflation worries 

 

Vance suspects Antichrist 'among us'...  

 

... like I'd be not shocked if the Antichrist was walking among us ... 

 

Well . . . what a coincidence!

 

👇 

 

 

Yields at these levels are dang near dead on the money

 Both are within a whisker of their respective long term averages of 4.64 and 5.16.