Jeffrey Rosenberg warns against overplaying the initial yield curve flattening reaction. He argues the real hawkish signal may be about the balance sheet, not just rates. Reducing the balance sheet would remove the term premium compression that has benefited bonds, potentially leading to a different market reaction than the initial flattening suggests.
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Bianco Research
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Jim Bianco 9.0
Investment Research Firm
Jim Bianco 9.0
6/18/2026 3:07:21 AM
ndx
The Fed may be less supportive... but it's occurring in an environment where the contribution... of the Fed's role is much secondary to what we're seeing in the real economy... the AI impact, the incredible amount of capital expenditures, the incredible amount of earnings growth.
| 12/8/2025 11:42:33 PM | medium term up | 20 days later | -0.56% | -0.56% |
| 10/21/2025 9:30:34 PM | short term up | 5 days later | +3.79% | +3.79% |
| 10/14/2025 3:53:14 PM | short term up | 5 days later | +1.60% | +1.60% |
| 8/14/2025 2:49:30 PM | medium term cautious down | 20 days later | -0.33% | +0.17% |
yields
Removing term premium support via balance sheet reduction would likely push long-end yields higher over time.
