Oil is up again along with bond market yields. Fed rate hike is more likely.
The 10-year yield is the highest since October 16, 2023.
Barr Discusses Decisive Action
CNBC reports Fed Governor Barr Says He’ll Support Rate Hike if Inflation Doesn’t Ease.
Federal Reserve Governor Michael Barr said Tuesday he would be prepared to support an interest rate hike if inflation doesn’t ease.
Speaking at a banking forum in Washington, the policymaker said he’s concerned about “broader price pressures taking hold” as inflation has remained stuck above the Fed’s 2% target for nearly 5½ years.
“If trends in the data give me some confidence that inflation is moderating on a path to 2%, then I think we can take a bit more time to assess our policy stance,” Barr said in prepared remarks. “However, if inflation appears not to be moderating sufficiently, then I think we should act decisively to raise rates.”
Global Bond Rout Continues
The Wall Street Journal reports Global Bond Selloff Intensifies as Investors Brace for Rate Hikes
- Worries that an impasse in the Middle East will keep inflation hot and force central banks to raise rates are fueling the selloff.
- Also weighing on bonds: Swelling fiscal deficits world-wide, increased competition from corporate borrowers and Fed Chairman Kevin Warsh’s reluctance to give forward guidance.
- The 10-year Treasury yield jumped, and was recently on track for its highest level since January 2025 ; its Japanese equivalent hit 3%, its highest level since 1996 after Scott Bessent hinted at possible BOJ rate hikes.
- Bond yields also rose to multiyear highs in Germany and France.
Crude
- West Texas Intermediate is up $2.74, 3.17 percent, to $88.47.
- Brent is up $3.94, 4.47 percent, to $92.32.
One more bad day and WTIC will be back above $90. And Trump will again claim it’s a small price to pay.
Political Realities May Force the Fed to Hike in September
Yesterday, I commented Political Realities May Force the Fed to Hike in September
It will be a stretch for the Fed to pause for many reasons, not just the CPI.
Today, that looks even more likely.
I stand by my assessment of the “political realities” and those include both Trump and the Fed for different explained reasons.
The Buffet Indicator peaked on 13 Aug 2026 at 240.24. This was the day the music stopped for the 1982 13/33 year money-debt expansion cycle. The Trumpist party, supporting data centers and the Iran and trade wars, the terminal bubble bad-debt expansion catalyst and the oil/consumer goods inflationary pricking catalyst, respectively, is on the hook as the primary identifiable causative agent.
You guys better start buying Japanese bonds pronto!
I have been waiting at least 4 years for these ‘bond vigilantes’ to turn up to this party
Nope. Watch the Fed continue to “stand pat”, make “hawkish noises” and say “The bond market itself is already doing the tightening for us”.
The so-called “Vigilantes??”