Ed Yardeni Says 'Watch and See' on a Bond Market Meltdown

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Transcript

00:00Let's get to this call, this bond market. What is more likely in your mind, a bond market meltdown

00:05or a stock market melt up? Well, my mind changes on that issue day by day, depending on

00:13how the markets are actually performing. Look, the 10-year is actually hanging in there at

00:194.5%. But as you said, there's some very unsettling developments going on in Japan

00:25right now, as an example. And there's more and more talk about a Liz Truss moment in Japan and

00:34even in the United States. That's what happened back in 2022, when the UK chancellor decided to

00:42have a very loose budget and the bond vigilantes reacted badly. It almost feels like bond vigilantes

00:50of the world unite. As you said, it's a global bond market now. And this fiscal problem that

00:56we're facing in the United States is also one that they're facing in Japan. And the way things are

01:02going, it looks like Europe is going to be entering that stage as well. So I would say on a near-term

01:09basis, it's more like watch and see. I don't want to kind of ring the alarm bells and tell you that

01:16we're going to have an imminent meltdown. People like Ray Dalio have been saying that for a while

01:20and it hasn't happened. And you have to remember, the Treasury here in the United States has

01:27demonstrated November 1st of 2023 that they can play games here. They can simply issue more bills

01:33and fewer bonds and notes. And that's what happened on November 1st of 2023. And the bond yield

01:39hit 5% and didn't see it again for quite some time. Hasn't seen it since.