Introduces topic: Treasury yields falling on geopolitical tensions, asks Jim Bianco what drove the 2025 rally in the 10-year yield.
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Jim Bianco
The 2025 decline in US 10-year yield was unique globally and likely political, driven by presidential pressure on the Fed for lower rates.
Clarifies: suggests an implicit 'Treasury put' from the administration made people reluctant to sell the 10-year.
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Jim Bianco
Agrees the 10-year specificity is unsustainable. Strong growth (4.3% GDP) and inflation in the upper 2% range will produce higher 10-year yields in 2026.
Asks about the global bond market center of gravity, specifically Japan.
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Jim Bianco
Japan's rising rates create an incentive to sell US Treasuries. Strong US growth means the Fed might not cut rates through 2026.
Asks if 2026 presents risks or opportunities, given foreign policy developments.
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Jim Bianco
Risks are skewed toward inflation. Venezuela sanctions are bullish for crude oil in the very short term as China finds other suppliers.
Asks what makes him most nervous on inflation, given tariffs haven't shown impact yet.
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Jim Bianco
Tariff inflation story is still ahead. The effective tariff rate has risen from 2% to ~10% and will continue rising into 2026, impacting inflation by mid-year.
Asks about unintended consequences of presidential pressure on the Fed, noting it has galvanized committee voters.
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Jim Bianco
The Fed is shifting toward independent voting like the BOE/BOJ. Even if Trump appoints a dovish chair, they may not have the votes for aggressive cuts if the economy stays strong.
Asks if this Fed independence is a pillar of his call for little Fed action this year.
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Jim Bianco
Yes. The expectation of multiple cuts due to a new dovish chair is misplaced because the chair may lack voting support.