Johns Hopkins economist Steve Hanke warns that the bond market is the only asset class currently pricing risk correctly, and that Trump’s monetary and fiscal policies have created a « deadly cocktail » for Treasuries. The 10-year yield could rise another 50 basis points, having already surpassed the 4.5% threshold that Treasury Secretary Scott Bessent considers his « red line. » Divisia M4 money supply growth stands at 6.7% year-over-year, above Hanke’s « Golden Growth Rate » of roughly 6% deemed compatible with the Fed’s 2% inflation target. On July 31, the 30-year yield hit 5.27%, prompting a coordinated yen-buying intervention between the US and Japan to prevent Tokyo from selling a portion of its $1.114 trillion in Treasury holdings. Hanke expects the repricing occurring in bonds to eventually spread to equities, which he describes as driven by an « AI hype » bubble.
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