Bond vigilantes were supposed to be storming the gates. Instead, the dollar strengthens and equities make new highs. What gives?
Look at the composition of the yield move. It's almost entirely real yields — not inflation expectations. Five and ten-year breakevens are still hovering around 2.4%, barely budged. This tells you the market is repricing real growth expectations, not pricing in an inflation spiral or a sovereign credit scare.
If this were 2022 all over again — a genuine inflation crisis — you'd see breakevens spiking and equities selling off in tandem. We're seeing neither. The bond selloff narrative doesn't match the data. Markets are adjusting to stronger growth and higher terminal rates, not panicking about fiscal collapse.
Context matters more than headlines.
Look at the composition of the yield move. It's almost entirely real yields — not inflation expectations. Five and ten-year breakevens are still hovering around 2.4%, barely budged. This tells you the market is repricing real growth expectations, not pricing in an inflation spiral or a sovereign credit scare.
If this were 2022 all over again — a genuine inflation crisis — you'd see breakevens spiking and equities selling off in tandem. We're seeing neither. The bond selloff narrative doesn't match the data. Markets are adjusting to stronger growth and higher terminal rates, not panicking about fiscal collapse.
Context matters more than headlines.