Talking Data Episode #7: When Will The Bond Market Wake Up?

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Welcome to the seventh edition of our podcast series: Talking Data, which offers timely insights into macro data and its impact on the economy and markets.

Our podcast features Jim Bianco of Bianco Research. In today’s installment, Jim will provide his insight on the bond market.

• How quiet is the bond market?
- Tightest range in history
- Lowest measures of volatility ever
- Ignoring commodities
- Ignoring other markets (the VIX)

• Why so low?
- The Fed's massive QE
- Promises to not raise rates for three years
- Potential yield curve control by the Fed
- Quiet inflation

• What gets it moving?
- A serious "risk off" event - on the par with this spring.
- A big recovery in the economy (vaccine and return to normal)
- A rise in expected inflation

• What does more bond market volatility mean?
- If volatility comes via falling yields, a market signal that a serious economy decline is coming.
- If volatility is via rising yields, a market signal that inflation is returning... so much so that the Fed might have to reconsider no rate hikes for three years.