The 30-Year Long Bond Yield Is the Highest in 19 Years.
There was only a 35 percent chance of a rate hike today, but the market reacted as if the decision to stay on hold was unexpected.
30-Year Long Bond FOMC Reaction
At 10:00AM today the long bond yield was 5.10 percent. The yield blasted straight up as Fed Chair Kevin Wash was trying to justify the Fed’s pause.
Essentially, the market doesn’t think much of the Fed decision today, and neither do I.
10-Year Treasury Note Reaction
When Does the Fed Raise Rates?
Only when the market expects it. Rate hike odds heading into the meeting were about 35 percent.
September Rate Hike Odds
The odds of a September hike are now 63.2 percent. But that’s down from a 76 percent chance of at least one hike yesterday.
Fed Chairman Tries to Explain Why an Interest Rate Pause Isn’t a Pause
Earlier today, I commented Fed Chairman Tries to Explain Why an Interest Rate Pause Isn’t a Pause
Reporter Q&A
Message from the MarketsQ: Steve Liesman, CNBC: What message are you getting from the market as to where policy out to be right now?
A: The message from markets is the message from markets. What we are tying to de is get an unfiltered message from markets.
Mish: Warsh rambled on for a minute unwilling to say the message from the markets is rates are too low.
Q: Steve Liesman: I get that Mr. Chairman. An the follow-up question is if the market’s are talking to you, and if it’s real rates are higher, it would suggest that’s where the funds rate out to go.
A: Interpreting markets is an imperfect business. We can think these things are over-determined. Blah blah blah Even though we have not done much in 42 days the markets have done quite a bit.Why Shouldn’t Rates Be Higher?
Q: Neil Irwin, Axios: Why should rates not be higher today?
A: Rates are higher today than they were 42 days ago. Markets have made decisions because we stepped back in part from trying to influence those. Market judgements have moved up. We are observing them. So I think it’s a mischaracterization to say the markets haven’t reacted because we didn’t move today. We will continue to monitor the markets and see how they react and that can help our decision making when we meet in 7 or 8 weeks. … This is a period of watchful thinking not watchful waiting.
Mish: That is disingenuous. Nobody is saying the markets didn’t react. What we are saying is the Fed is ignoring the markets and doing what it wants.Explain the Pause
Q:Edward Lawrence, Fox News: What specifically in your mind would be the argument for a pause today?
A: I wouldn’t characterize what we did today as anything like a pause. I would characterize what we did as a rigorous review of the economic situation. I would characterize what we did as a review of the big hard questions. And I characterize it as a view of what our own homework is. If you were to force a description of this as a pause, I would say financial market prices would take the other side of that. The financial markets in this intermeeting period did not pause. They reacted to the inflation data in one direction, strong economic growth in the other direction.
MIsh: A pause by any other name is a pause.
Disingenuous Warsh
I did not expect the Fed to hike today.
Going into the meeting, I commented that I though the odds were more like 15 percent than 35 percent.
But we didn’t expect nonsensical statements as to why a pause isn’t a pause either.
Also note Powell responded to CNBC’s Steve Liesman that “The message from markets is the message from markets. What we are tying to de is get an unfiltered message from markets.”
I am pleased to report we have an unfiltered message in real time.
In case you missed the message, here it is. “Dear Fed you blew it already.”
Fred is annoyingly late on posting GDP data and income PCE data.
I can produce no charts or reports without data.
Mish, What is your take on this? Are we close? (I could hardly find a podcast last night that was not talking about Economic Collapse– worldwide)
We always seem to be on the verge for one reason or another for years if not decades.
The only way we see a global collapse is WWIII, China taking Taiwan and halting global production of chips, or oil permanently blocked
So how likely are any of those?
The Fed has no choice but to LOWER rates. Fiscal insolvency, a failing market for its debt, industrialization that is out of phase with debt resolution imperatives, its all going one place – monetization, huge inflationary event, lower dollar.
For Kevin Warsh to be effective at his job, he will sooner or later have to tell Trump that he is a complete moron. Not sure there is a betting market for this, but I don’t think many people at this point would bet that Warsh will try to be effective.
Fed Chairman – New Boss – Same As The Old Boss.!
‘Cause they say
2026, zero, zero, party over
Oops, out of time
So tonight I’m gonna party like it’s 1929
“A Land without a Grift, and a Grift without a Land” about sums it up.
Can’t wait to see the tantrum Trump is going to throw when the Fed is forced to hike in September to calm the bond market.
Warsh was on point. Velocity has peaked
Velocity is fucking meaningless..
It predicts nothing. And it has no independent life of its own.
Velocity can rise or fall with rising or falling prices
It can rise or fall with rising or falling GDP
Totally fucking meaningless.
It may be early days, but so far Warsh is „all hat, no cattle.“
I could hardly find a podcast last night that was not talking about Economic Collapse– worldwide. From Germany looking like TRUMP’s American a year ago to guys on podcasts speaking of riots and getting ready.
Ask the employees over at Porsche
You mean VW
It’s both.
https://www.reuters.com/business/autos-transportation/volkswagen-ceo-aims-cut-up-100000-jobs-next-years-manager-magazin-reports-2026-06-26/
https://www.wsj.com/business/autos/porsche-to-cut-a-further-5-000-jobs-5cef413f
I remember when German cars were awesome, if you could afford some of them. I put 250,000 miles on a late 70’s VW Rabbit before the rings went. Porsches are like super hot chicks, expensive, high maintenance…. but OMG, just LOOK at her!
Nope, I mean Porsche
Porsche Ownership in 2026: What ChangedPorsche AG’s ownership structure underwent significant evolution by 2026, primarily driven by Volkswagen Group’s strategic repositioning around electric mobility and autonomous driving technologies. The Porsche and Piëch families, through Porsche SE, maintain their controlling stake at approximately 53.3% of VW Group’s voting rights, while Porsche AG’s public float has expanded to 37.5% following additional share offerings. Qatar’s sovereign wealth fund increased its position to 8.2%, reflecting Middle Eastern investors’ growing interest in premium automotive technology companies. The ownership changes support Porsche’s $15 billion investment in AI-driven manufacturing and autonomous vehicle development.
The coming economic collapse will start in Asia, then go global.
Japan becoming the last major sovereign to raise interest rates was the canary in the coal mine. That has almost killed the Yen carry trade that helped funnel a shit load of money into US equities markets. Plus nobody cooks their books worse than China and when the tide goes out that fact will be exposed. Most people think China has it going on now but it’s all fake numbers because China will “disappear” anybody that says otherwise.
China’s main battle right now is preventing capital from leaving the country.
Aaaand look at S. Korea shitting the bed now.
The global economy has passed the event horizon of the swirling bowl, along with the climate.
Anything we do now is a drop in the bucket compared to the past 70 years of stupid decisions.
Buckle up, buckaroos.
The only thing missing are the “DEER IN HEADLIGHTS” looks from people like him. He was hired to look calm in an ocean of shit.
He can stand in the presence of a full adult diaper, and not wrinkle his nose.
I would like some journalist to ask of the politicians and fed about the dollar supply and demand dynamics within the US market and the effect on interest rates. The US government will rollover $10 plus trillion, issue another plus minus $2,5 trillion, state and local debt is increasing, corporate debt is ballooning to finance data centers probably expanded defense manufacturing capability not to mention additional debt for other purposes and rolling over existing debt, and stock issuance is very high to include record ipo’s. Also add in the trade deficit that Trumps seems bent on making worse. That seems like huge demand for dollars that will push up the cost of borrowing to balance demand with supply.
If Trump gets his way fixing rates lower, artificial supply enters the market and distorts market forces distribution to the most beneficial applications. In my view, the fed raising rates or following market price discovery is the best way to avoid creating bubbles and encouraging malinvestment. It will mean pain for US citizens but putting it off only exacerbates the pain when inevitably experienced later, or the consequences of kicking the can down the road.
I would like some journalists to ask politicians why the national average interest rate for a standard savings account is 0.38% (according to the FDIC) and yet banks can charge 21%+ interest rates for a credit card! And that’s for somebody with GOOD credit! I pay off my balance monthly but tens of millions of people are living off their cards right now by necessity. I’m going to invest in the debtors prison industry when it gets started. $$$
Bro…you can get CD’s paying above 4.00% all the way up the curve
https://fixedincome.fidelity.com/ftgw/fi/FIYieldTable?popupMode=Y&yldTabSelected=M
Joe, how is that been going, beating Inflation? NO? Did not think so.
No…it’s not…but it doesn’t matter…the country is hosed, dunzo, it’s over chief.
Bro…. I know this. Most people living off their credit cards think a CD is something that you play to hear music. That’s who I’m talking about.
lolz
You mean a Compact Disc, gramps?😀
The debtor’s prisons are all owned by Corporations.
They call them “open offices”
You do understand that it’s over for the US. Correct?
I’m being serious…not only are we about to breach $40 TRILLION “bigly” — the rate is now increase geometrically.
Add in another $100++ TRILLION in unfunded liabilities.
It’s done amigo…finished.
It’s finished when the bond market says it is finished. The Fed can postpone it a little by destroying the currency.
I have been replying to that thought for a long time on this blog calling for action by congress. Being in a real bad spot does not mean we should not try. We were in bad spots after WW! and the Spanish Flu pandemic and again after WW2, Congress did the right thing, and we turned a really bad situation into a prosperous nation. I have posted those details in replies several times.
Buy a couple books about how folks fared during Weimar…it’s an eyeopener…and not in a good way
You are comparing apples to oranges.
Population of the USA in 1930 was 123 million in 1950 it was 151 million. Immigrants in this country back then went out of their way to assimilate and learn to speak English. Out side of major cities the economy was mostly agrarian and people could take care of themselves with little if any government assistance.
Now population is about 350 million (not counting illegals because they can’t accurately be counted)) immigrants demand free everything and to hell with “our” culture/language.
That country with a homogeneous, self sufficient, half the population as of now, you are talking about doesn’t exist anymore.
It is not apples and oranges to compare budgets in the early 1920’s late 1940’s and cutting budgets now. We need to place blame where it belongs, with our country’s leadership or lack of it, over the past some 75 years. With respect to financial matters, government has consistently spent more than has been taken in, nearly $40 trillion, and now the chickens are coming home to roost. Immigrants then and now are not the root cause of our $40 trillion problem.
Reagan put the United States of America, which he hated, on the charge card.
No amount of spreadsheet manipulation is going to save the US — #err circ-ref
This is such an important point and it can not be overemphasized. And in the next shakeout it will be the remaining agrarians that survive with relative ease…along with the Amish. Anyone in cities, urban areas or suburbs is as good as dead once the trucks stop deliveries. Any trucks that do hit the road will require military escort — and that will be impossible. In short — game over, thanks for playing
Most of those Agrarians won’t be able to make it either once their farm equipment stops getting diesel fuel, electricity and fertilizer for the crops.
You think they are going to plow fields by hand or with animals and rely on nature for rain, fertilizer etc? Only the Amish retain those skills.
At best some might eke out some subsistence farming on an acre or two if they know how to grow multiple crops (most farms specialize in 1 crop) but they’ll always be one drought away from dying.
Yep, I was referring to this:
Nonsense… this will be a great opportunity to pivot careers to highwayman.
Those were external. This problem is internal: The morons have totally taken over our democracy.
Aside from paying a bounty for moron ears, there is no fix for this.
Sounds like it is time to party (like 1933)
Great advice for 30 years ago. Now the pain truck is overloaded and barreling down on us.
So, we should just quit and let the country fail, that is being a defeatist. We are where we are due to stupid policy over many years. Now is not the time to let the truck run over us, rather it is time to take on the problem head on. Procrastination assures a full load of pain.
No, it’s being a realist.
There comes a point in time when abandoning ship or escaping from a burning building are the only choices. There comes a point in time when you must accept the things that you have no power to change. We have passed the event horizon. I hate to keep repeating myself, but many here suffer from a bad case of normalcy bias.
ALL empires fail. Period. End of story. ALL of human history proves it. Humans come from the factory hard wired to self destruct and ALL of human history proves it
You would think at this point in time of human evolution, we would have figured out how to live without wars and killing each other for power, greed, lust, or just for the hell of it. But no, same old shit, over and over, ad infinitum.
Dinosaurs were here for 175 million years. Humans won’t be here for even 1% of that time.
You can go down swinging and pissed off if you want but I will go out being grateful for my life experience in this world and whatever happens is going to happen… in this life and the next (allegedly). The only thing we have the ultimate power to control is what’s inside of our heads.
KOSPI investors taking the pipe
“Sideline cash” being blowtorched
Inflation may truly be transitory at this time, since its based on elevated energy prices directly attributed to the Iran conflict. Q for Mish: Do you expect this conflict to go forever? I didn’t think so, thats why he’s not raising rates, Duh!!!
At least 10 more years….probably longer
Israel is running this op, not the US puppet government…until you understand this, nothing wilt every make sense….once you understand this, it all falls into place, and you’ll even be able to predict “next move”
Two more years – tops.
Once Trump is gone, Israel is toxic.
Trump may be gone but not the Uniparty
The U.S. is the Empire, not Israel. Trump has lambasted Netanyahu over the phone, due to some of his actions. A puppet would not do that.
Covid kick started the present round of inflation and exposed many problems and the “war” is making it worse. Inflation for food and shelter is not going away. For everything else it might slow down for periods, but the the long term trend is up. If inflation stops, it’s just inflation, but PRICES still remain high. That’s the rub.
A growing economy needs 2% inflation to go forward, that’s why The Fed put it’s goal at that figure, anything below that is stall speed and potential recession.
Inflation-hyperinflation-demand destruction-recession-depression.
Lather-rinse-repeat. Everything is cyclical and we are way overdue for a full blown depression. 2008 was the last chance to fix things.
Inflation at 2% is not needed for economic growth, it is trashing the currency at a slow rate which is not a formula for growth but rather slow destruction of our economy. Have a look at the two links below for full explanation:
How Much Credit Growth Does It Take to Expand Real GDP? – MishTalk
Why Increases in Money Supply Can’t Create Economic Growth | Mises Institute
Covid was a test firing to see if people would comply. Complying, in my book, was a failure of humanity – – worldwide CROCKERY.
Correct. Covid was a symptom and used as a to test how far government could push.
I fear that you sir, have only a tenuous grasp of economics: and even less idea about the hole the US is digging in the ME.
We were lied to here, inflation is only transitory, well guess what Sherlock, it ain’t, It’s now embedded. Doh!
I think the only thing ‘transitory’ about inflation is that it hasn’t yet exploded higher than it currently is. I think that we are at a transitory low spot of inflation. We haven’t seen anything yet. Even the 1980 inflation rate of 13% will probably look tame to where we are headed. I remember my mom having 18% Nevada Airport tax-free bonds back then. She cried when they were called.
“Go on Forever” is the best weapon in the Iranian arsenal, and they know it.
These days we have “Fed news conferences.” Politics by an other name. Try to imagine what was discussed behind closed doors between Richard Nixon and Arthur Burns.
The people with few hard assets in this country will always suffer the most, as your purchasing power is slowly diminished.
Hey, everyone remember how Orange-Cheeto-Dust was trying to bait us with the notion that Iran’s oil extraction capacity would be permanently damaged if not able to ship it out…
Well, how about these apples?
As of the latest available data, the U.S. Strategic Petroleum Reserve (SPR) is at its lowest level since 1983
———————–
What happens if the US SPR’s are depleted?
Are there limits?Yes.
Each cavern has a finite number of safe full drawdowns before engineers determine that additional drawdowns could compromise long-term integrity or deliverability.
Importantly, the limit varies by cavern. Sandia’s analyses have found:
Many caverns can tolerate multiple additional drawdowns.Some caverns have much lower remaining drawdown capacity.A few caverns should not undergo another complete drawdown because of their geometry and stress state.
Caverns are filled with brine to maintain cavern integrity when the oil is sucked out of the caverns. Where are you getting those facts of yours?
You are thinking of commercial storage facilites which use brine because they are designed to undergo numerous filling and depletion cycles. But the SPR was designed to be rarely used. So the SPR uses an open freshwater system. And of course, the freshwater will dissolve the salt in the SPR cavern walls.
Fed determines nothing — they follow the market, as well as manipulate it using their relationship with the primary dealers and other market intermediaries
Several Israeli and regional officials have assessed that Trump plans to contain his campaign against Iran until after the midterms, noting the conflict’s unpopularity, lack of munitions, fear of a global economic crisis, and hope that economic pressure alone could lead to concessions or regime change (SOURCE:Ynet).
Note that these are assessments; they’re not statements by anyone familiar with Trump’s thinking or that of his national security team, but rather educated guesses based on current circumstances. According to the same assessments, the plan after the midterms will be a broader military campaign with Israeli assistance, as the administration believes any diplomatic resolution is unlikely at best.
A WSJ report gave a different assessment, with a White House official saying Trump is in an “escalatory mood.” Admiral Cooper of CENTCOM also just drew up a plan for a two-week bombing campaign that Trump is reportedly weighing.
If the Israeli and regional assessments are accurate, then supposedly, the Strait would remain closed the entire time. Obviously, SPRs are running dry, and there are signs that Chinese demand is set to rebound. It’s possible Trump won’t be able to avoid a surge in oil prices without another half-assed deal to reopen the Strait.
The only regime change I see out of the Iranian war is Bibi being ousted and Trump not being far behind if Republicans get hammered this November.
Let’s all remain positive and grateful that Kevin Warsh has been brave enough not to cut rates, which is the main reason he was appointed to his current position! 😉
Why would any investor buy any sovereigns’ 30-year bond?
You can sell bonds before maturity, if rates go below the rates the bonds were bought for, they can be sold on the secondary market at a profit. The bond market is screaming inflation right now, that’s why rates are creeping up. It’s just another form of legal gambling.
What are your other choices?
1) 0% return under your mattress
2) speculative return in the stock market
People in retirement or close to it can’t afford to put much money in option 2 since even a small decline in the market could wipe out years of retirement money and option 1 is way worse that 5% return.
The FED is kicking the can down the road. Expect more stagflation as a result.
Wars are inflationary. Tonight the Iranian War expanded. It is now a regional war as well as NATO involvement plus Ukraine so there is Israel, US, Saudi Arabia, Jordan, Ukraine and most likely Germany, France and the UK on one side with possibly the UAE mixed in.
On the other side is Russia, China, Iran, Iraq, Yemen.
Sitting on the fence Turkiye, Pakistan. Oman, Qatar, Syria, India.
The pawn is Lebanon.
Nevermind the ME going up in flames the Digital Zero Overlords have spoken!
Walrus is making the case that the Fed is useless and not needed, let the market set the rate. Maybe the plan with all his committees and task forces is to eliminate the Fed.
Re: Also note Powell responded to CNBC’s Steve Liesman that “The message from markets is the message from markets. What we are tying to de is get an unfiltered message from markets.”
Powell??!! Or is it Warsh?
The FED doesn’t work. It doesn’t fulfill or accomplish it mandates. Never has. Why? Because it was designed make the world safe for private banking and reinforce banking’s monopoly paradigm for the creation and distribution of virtually all new money. Raising interest rates is a heavy handed piss poor policy. This is mostly because “free” market theoretics is actually a fetishized misnomer for TOTAL freedom IOW chaos because in the human universe and human systemic policies there is only freedom within known and enforceable barriers. Thats because there’s this “little” thing called ethics…which people who can only think in terms of an orthodoxy blithely ignore. Orthodoxies prevent actual looking/perceiving and so trap people into stupidities, falsehoods and unworkabilities. You want to end inflation and supercharge the robustness of the economy, use double entry bookkeeping’s operations of equal debits and credits that sum to zero applied to price at retail sale with a 50% Discount/Credit to the consumer and Rebate/Debit back to the merchant granting the 50% discount and voila! beneficial price and asset deflation. Just keep doing the debits and credits until you see it.
I’m not disagreeing with what you say above, but the purpose of a central bank is to fund the government’s deficit. Those aren’t my words: I got them from a libertarian writer about fifty years ago. The central bank is there to make sure that there is never again a situation where the government only has 37c left in the Treasury. The rest of what the central bank does is window dressing.
Yes it can do that also even with minimal taxation on income. The central bank can create as much money as it desires. That would result in inflation in “free” market theoretics…unless of course the created money was the rebating of the discounts granted to consumers at retail sale because being able to buy $100 worth of goods for $50 or buying a $500k house for $250k is a funny kind of inflation. And of course opting into the 50% Discount/Rebate policy would include a promise not to inflate your prices by more than 2% per annum, and any revenue you garnered by additional inflation would be taxed at a rate of at least 100%. Furthermore, no sane business owner would be able to resist such a policy because if they did even the stupidest consumer is not going to give them 100% of price when they can walk down the street and only pay 50% of it to their competitor. Finally, why would a business person not want such a policy when it potentially doubles the demand for every one of their goods and/or services???
The central bank CAN create as much money as it desires, and that doesn’t result in inflation: that IS inflation. The price rises are the result. Your proposal would result in chaotic price rises in all sorts of things that weren’t included in the government plan, and a general loss of confidence in the authorities – not that I am suggesting that they deserve our confidence.
You would probably want to hire an awful lot of police to try to keep your economic recovery on track and everyone obeying the rules, and even so, it wouldn’t work. It mathematically can’t work.
Ten year barely moved. MBS’s came off their lows as the day progressed. I’ll leave it to others to explain what that means in relation to the long bond.
As long as he keeps taco happy, he will be fine.
Yup now the only people that will know is kw/ trump friends and family.
I wonder if trump will leak to truth social.
Trump is constantly building a lifeboat. So is Musk. They will fail at that, but in any event, in their world, we are the remaining passengers below decks, the dumb money, the bag holders.
Meanwhile one component is Trump’s hope to monetize his own leaks to Truth Social, a bone tossed to other low-latency elite traders, though for eye-popping fees.
Very disappointing. As usual from the Fed. More inflation and the shit will ultimately hit the fan. Is this an example of half ass kissing?
Warsh is saving kissing the other ass cheek for a more strategic moment. Trump is saving his version of “turning the other cheek” for his own strategic moment. Trump is the alpha in all this, but the other anxious sub-predators are jockeying on the Titanic.
Ran into a real estate broker in the store today and he gave me a glum face when I asked him how’s business with current interest rates. He remarked “We’re figuring higher for way longer” and even right now 7% for a 30-year is no fun.
It’s what the majority of voters voted for.
I don’t think Trump voters voted for this. Trump won mostly due to Biden’s inflation. Trump since assuming office has increased inflation.
Interest rates are the cost of money.
They voted for a man who made tariffs the main face of his platform. They got tariffs. Here’s hoping they check the dictionary or Wikipedia before they vote next time.
They swore those useless rags off when agreeing to vote for Trump
The overwhelming reason why Trump was elected in 2024 was inflation. I would argue the second reason was immigration. Tariffs were NOT on the radar as to why Trump won. It was way down on the list.
Literally the stupidiest people on the face of the planet
Wow, even dumber than people with stunted mental development or stuff like Downs Syndrome, that’s a big claim, mister!
People with Downs Syndrome arent dumb. They have hearts of gold and are very humble, which is a lot more wisdom than I’ll ever probably have. In the afterlife, they will have a very big reward.
Imagine how the bond yields would have reacted if the Fed had done what Trump wanted and actually lowered the rates.
The fed will cut rates when the DOW, S@P and Nasdaq are cut in half. Either way, we are looking at eventual disaster as our worthless Congress and POTUS have done nothing to correct the serious problems we have been facing for decades due to fiscal irresponsibility, ruinous wars and a whole lot of other problems. There may eventually be a bright future for the USA, but not before a really big fall. The current military disaster in Iran may be the spark that lights the fuse.
The empire is out of control and Warsh is playing with fire. Our excessive debt and diminishing reputation are going to cause a revaluation of dollar denominated assets, no matter what warsh does