The August sell-off in stocks has investors rushing to the relative safety of bonds, sending the yield of the benchmark 10-year Treasury note to its lowest in nearly three years.
"The bond market is screaming that the economy is slowing; that the trade war is going to escalate," said Jim Bianco, president and macro strategist at Bianco Research.
Bianco told Cheddar on Wednesday, as the Dow Industrials traded lower by nearly 300 points, that treasury yields are telling economists something that the stock market is not. The combination of trade concerns, a cooling global economy, and the Fed's seeming unwillingness to keep cutting rates is flashing warning lights for the U.S. economy.
For those who would point to relatively strong corporate earnings, a 50-year low in unemployment, stable inflation, and high consumer confidence, Bianco responded that those are all "backward-looking" indicators that "discount where we're going." The bond market, however, show "where we're going."
The Fed Funds rate ー which currently is close to 2 percent after last month's rate cut ー may seem low historically, but Bianco said that it's all relative. "It's actually high because it's higher than every other interest rate in the world." In his argument, more rate cuts are in order sooner rather than later because while the Fed can be too late to act, it can't be too early. If further rate cuts now don't help the economy, rate cuts later won't either, he said.
"It's either going to work now or it's not going to work at all."
The market, for its part, is pricing in five rate cuts between last month and next year, which Bianco said is not even remotely the consensus of economists. It's rare ー and worrisome ー that the market is pricing in an extreme like that.
Meanwhile, bond yields continued to move lower in the UK and Germany ー a sign that the flight to safety for fixed-income traders is not isolated to the U.S. and that a trade war with China that continues to show no end in sight is increasingly a global sign of worry about what's to come.
The State Department had been in talks with Elon Musk’s Tesla company to buy armored electric vehicles, but the plans have been put on hold by the Trump administration after reports emerged about a potential $400 million purchase. A State Department spokesperson said the electric car company owned by Musk was the only one that expressed interest back in May 2024. The deal with Tesla was only in its planning phases but it was forecast to be the largest contract of the year. It shows how some of his wealth has come and was still expected to come from taxpayers.
At 100 years old, the Goodyear Blimp is an ageless star in the sky. The 246-foot-long airship will be in the background of the Daytona 500 — flying roughly 1,500 feet above Daytona International Speedway, actually — to celebrate its greatest anniversary tour. Even though remote camera technologies are improving regularly and changing the landscape of aerial footage, the blimp continues to carve out a niche. At Daytona, with the usual 40-car field racing around a 2½-mile superspeedway, views from the blimp aptly provide the scope of the event.
You'll just have to wait for interest rates (and prices) to go down. Plus, this deal's a steel, the big carmaker wedding is off, and bribery is back, baby!
It’s a chicken-and-egg problem: Restaurants are struggling with record-high U.S. egg prices, but their omelets, scrambles and huevos rancheros may be part of the problem. Breakfast is booming at U.S. eateries. First Watch, a restaurant chain that serves breakfast, brunch and lunch, nearly quadrupled its locations over the past decade to 570. Fast-food chains like Starbucks and Wendy's added more egg-filled breakfast items. In normal times, egg producers could meet the demand. But a bird flu outbreak that has forced them to slaughter their flocks is making supplies scarcer and pushing up prices. Some restaurants like Waffle House have added a surcharge to offset their costs.
William Falcon, CEO and Founder of Lightning AI, discusses the ongoing feud between Elon Musk and Sam Altman, and how everyday people can use AI in their lives.
U.S. tariffs on steel and aluminum “will not go unanswered,” European Union chief Ursula von der Leyen vowed on Tuesday, adding that they will trigger toug
The Trump administration has ordered the Consumer Financial Protection Bureau to stop nearly all its work, effectively shutting down the agency that was created to protect consumers after the 2008 financial crisis and subprime mortgage-lending scandal. Russell Vought is the newly installed director of the Office of Management and Budget. Vought directed the CFPB in a Saturday night email to stop work on proposed rules, to suspend the effective dates on any rules that were finalized but not yet effective, and to stop investigative work and not begin any new investigations. The agency has been a target of conservatives since President Barack Obama created it following the 2007-2008 financial crisis.
