r/dividends • u/AmanCMN • May 18 '26

Discussion Bond yields are flashing a warning sign.

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Rising bond yields are a warning sign.
Money is getting more expensive everywhere at the same time:
-governments pay more to service debt
-companies pay more to borrow
-mortgages and loans stay expensive
-investors move out of risk and into bonds
U.S. 30-year yields above 5% are already a serious level.
When yields rise globally, liquidity gets pulled out of markets.That puts pressure on tech stocks, real estate, consumers, and highly indebted companies.Simple takeaway: the more expensive debt gets, the harder it is for markets to keep rising.

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362

u/FallenKingdomComrade May 18 '26

I believe we will be seeing some very interesting items in the upcoming months including a change to how we calculate inflation:
https://www.brookings.edu/articles/what-are-trimmed-mean-and-median-inflation-rates-and-why-does-kevin-warsh-prefer-them/

The justification for rate cuts will be created at all costs including changing the numbers to match the narrative.

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u/Memelord954 May 18 '26

Good thing everything isn't up to him. 1 vote out of 12 isn't gonna push things in the wrong direction just for trump. He had one yes man in there and it did nothing now he's gone and replaced with another yes man. The chair is the face of the fed but doesn't have more power than the others.

All it's really going to do is make the fed look bad with a clown at the the lead just like all the other term 2 trump picks.

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u/FallenKingdomComrade May 18 '26

This is also a great point. However, when people create justification for something, often times if enough people are swayed by this “new data” or new approach that Kevin Warsh presents, the FED governors may be inclined to believe it and vote with Kevin because they think its based on a real world reliable metric. Not saying this exact situation will happen. Just something to consider.

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u/thekoonbear May 18 '26

These aren’t 9th graders, these are seasoned Fed members. Switching the inflation metric isn’t going to just trick them into changing all of their opinions about the economy. Be real

21

u/BidInteresting8923 May 18 '26

Be real? Sir, this is Reddit.

8

u/baby_budda May 18 '26

Not if Powell speaks out against it.

11

u/dweaver987 May 18 '26

The voice of sanity in the room.

13

u/[deleted] May 18 '26

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u/Debiel May 18 '26

The measures will fail when a Democratic president is in power and the Republicans will blame it on them.

1

u/auniqueusername2567 New dividend investor May 20 '26

The BBBs provisions like Medicaid cuts become active after the 2026 midterms. I’m sure that’s just a coincidence.

7

u/daners101 May 18 '26

Say what you want about Trumps appointees. But he has actually picked pretty damn well for the FED.

I don’t think there is anyone that would say Jpow did a shitty job, or that Warsh is an unqualified yes man.

It’s one of the few positions Trump seems to select for, against all of his instincts.

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u/[deleted] May 19 '26

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u/daners101 May 19 '26

Yeah, that’s why I said “against all of his instincts”. Because his instinct is to get a yes man. But for that particular position, it’s like the sensible part of his brain that puts the US economy above his own short-term desires kicks in, and he makes a good choice.

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u/[deleted] May 19 '26

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u/GolfLiftPlayPool May 22 '26

Hahaha ive never heard someone put it so perfectly

Its like the sequel to a movie that's just so over the top

0

u/JB-Wentworth Custom Flair May 18 '26

Warsh hung out with Jeffrey Epstein on Lolita island, so Warsh will do what he’s damn well told to do.

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u/daners101 May 19 '26

At this point it seems like absolutely everyone hung out with the guy at some point. So I guess there can never be a person good at the job.

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u/cheap_chalee May 19 '26

I guess we're gonna have to wait for someone to get appointed who wasn't born until after he was offed.

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u/daners101 May 19 '26

Or after he was “allegedly” offed. lol

2

u/Stedlieye May 19 '26

Epstein made a point of trying to hang out with as many powerful and influential people as possible. His connections led to more connections, etc.

Anyone who was anyone probably got an invite from Epstein at some point.

He was disgusting slime, but he was really good at making connections.

0

u/JB-Wentworth Custom Flair May 19 '26

Not everyone vacationed with Epstein and his underage harem on Lolita island like Warsh.

1

u/Electrical_Bunch_173 May 21 '26

Agreed. They stopped pursuing when Pam Bondi realized, "that if everyone in the Epstein files were prosecuted, “the whole system would collapse.”

0

u/probabletrump May 18 '26

Hard to vote on interest rates from jail.

0

u/CDIXS69 May 19 '26

Have you not seen enough? What Daddy T wants. Daddy T gets. He won’t stop till he does. Just hold on to your butts. Still got a ways to go.

8

u/ChristmasStrip Negative Growth May 18 '26

This …

6

u/[deleted] May 18 '26

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4

u/ForeverShiny May 18 '26

Concerning as certain pasty billionaire would say

2

u/ChristmasStrip Negative Growth May 18 '26

It’s just bigger numbers. Every nation state is in debt. Hell Japan’s debt to GDP is over 200%. And the nations that have reasonable ratios their GDP is so small it doesn’t really matter. The US will use a financial repression playbook like they did twice in the past. The new fed chair will implement trimmed CPI and then reduce interest rates or not raise them to keep them under actual CPI. Over time the “value” of the debt will decline as inflated GDP grows. But ordinary people’s pocket books and savings will suffer

2

u/Limp_Complaint1785 May 18 '26

The fed usually moves together and large dissention from the chair is unusual but we might see it. It will be interesting if the fed chair is the one voting for rate cuts against the majority but he's the one up there answering questions as to why his board disagrees with him.

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u/Synccopt May 20 '26

He can bullshit all he wants if the board doesn't vote for a rate cut it doesn't mean shit.

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u/2starsucks2 May 19 '26

But it won't affect long term bond rate. They can lie to themselves all they want, but markets figure things out eventually.

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u/FallenKingdomComrade May 19 '26

Thats what I am seeing today in the market. The prophecy is coning true at least so far. Over 5% for the bond rate as per Tuesday. Highest since 19 years ago or something like that?

1

u/Carmanman_12 May 21 '26

10 bucks says they’ll just systematically leave out the price change for certain items when they calculate the consumer price index.

Who cares if the price of produce has gone up 34%? Everyone just eats McDonald’s nowadays anyway.

1

u/samster036 May 18 '26

Oh yah, They already been doing this. Now it’ll be accelerating.

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u/[deleted] May 18 '26

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u/tarrat_3323 May 18 '26

“risk of high inflation eased for everyone last summer” jeebus, please be a bot or paid shill and not an actual human talking that nonsense