TJ Walker explains why the bond market cuts through political spin. Politicians claim inflation is gone or pivot to culture wars, but bond yields reflect hard economic facts: energy prices, debt levels, and growth. The market demands what it demands, regardless of what anyone says.
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The bond market cannot be distracted. A politician can announce that inflation is disappearing. The bond market looks at energy prices and says, that's adorable. A politician can ignore a massive deficit by warning that the other party wants transgender athletes playing volleyball in your kid's bathroom. The bond market says, interesting. Your interest payment is still due Tuesday. You can change the subject to immigration, socialism, podcasts, pronouns, or what somebody wore on television. The bond market does not care. It has no yard sign. It doesn't watch cable television news. It's never said, I did my own research. It examines inflation, debt, government policy, economic growth, and the likelihood of being repaid with dollars that still buy something. Then it gives you a number. That number is the yield. And the yield is the bond market's way of saying, I heard your speech. I would still like 5%.