00:00Are the vigilantes back? This is what Ed Yardeni, if you had any research, has got to say. The bond
00:04vigilantes are back, taking matters into their own hands and tightening credit conditions.
00:09Ed joins us now for more. Ed, welcome back to the program, buddy. Let's just sit on that,
00:13because some people believe that maybe the buying has started on Friday and continued into this
00:19morning. Where are you on that? Well, I think we're going to continue to see bond yields
00:24fluctuate at these levels, which are relatively high and relatively tight in terms of their impact
00:31on the credit markets. Clearly, we've got a bullish and bearish tug of war going on here.
00:39This morning, you folks, Bloomberg, you've posted an article on how bond yields have come down a bit
00:48and suddenly the market focusing on the fact that this oil shock could slow globally,
00:54economic activity. On the other hand, we got to these high levels over the past few weeks
00:59on worries about higher inflation. And I think it's pretty clear that inflation is going higher.
01:05It's not clear that the global economy is going to be as weak as the bond market would like to
01:13see.
01:13But we'll have to look. As you said, a lot of known unknowns and unknown unknowns.
01:19For sure. Do you think the fiscal offset that some countries might provide to cushion the energy
01:25shock might contribute to higher bond yields from here? Well, I think clearly inflation concerns have
01:33mounted. In turn, that means that monetary policy, which was widely expected to ease around the world,
01:40now is expected to not to ease and possibly to tighten. And as you add here, there's also a concern
01:49that
01:51governments around the world are going to have to spend more on defense. So that's going to increase
01:56deficits. And then they might also need to spend more on stimulating their economies if we get a real
02:02kind of stagflationary environment with the emphasis on the stags, much slower economic growth.
02:09and be able to build better with the chi. And that's what I'll do with the
02:09example of the comparison of the city here and how can I see. That's what I'll be able to find.
02:09And that's what I'll be able to do with. And that's what I'll be able to do with because we
02:09can take in the
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