What’s Driving the Rise in Long-Term Bond Yields? | Jim Bianco

Hidden Forces

Demetri Kofinas

Government, Business

4.8 • 1.6K Ratings

🗓️ 20 January 2025

⏱️ 57 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

In Episode 397 of Hidden Forces, Demetri Kofinas speaks with Jim Bianco, President and Macro Strategist at Bianco Research, about the macroeconomic factors driving the recent rise in bond yields and a range of other variables shaping the economies of the U.S., Europe, and China, as well as their impact on investors' portfolios.

In the first hour, Bianco and Kofinas analyze the factors behind the surge in long-term interest rates across the developed world. Their discussion covers the Federal Reserve's role, concerns about government debt and deficits, inflation, tariff policies, and economic growth expectations amid these potential challenges.

In the second hour, they shift their focus to the implications of these changes for investors. They explore the resilience—or lack thereof—of the traditional 60/40 portfolio and strategies for mitigating portfolio volatility in a market environment where stocks and bonds increasingly move in tandem. Additionally, Demetri and Jim examine the drivers of U.S. dollar strength, the risks posed by U.S. equity concentration, the potential for a recession, and what the continued decline in Chinese bond yields suggests about the state of China's economy.

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Episode Recorded on 01/14/2025

Transcript

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0:00.0	What's up, everybody?
0:02.0	My name is Dimitra Kaffinus, and you're listening to Hidden Forces, a podcast that inspires investors,
0:09.0	entrepreneurs, and everyday citizens, to challenge consensus narratives, and learn how to think critically
0:15.0	about the systems of power shaping our world.
0:19.0	My guest in this episode of Hidden Forces is Jim Bianco, president and macro
0:23.6	strategist at Bianco Research, where he writes about monetary policy, government's role in the economy,
0:29.9	fund flows, financial positioning, and much more. I invited Jim on the podcast to discuss the
0:35.3	recent rise in bond yields, factors contributing
0:38.5	to that rise, as well as a host of other macro variables influencing the U.S.'s,
0:44.0	Europe's and China's economies, investors' portfolios, and much more.
0:49.1	We devote the first hour to understanding the sources of the recent rise in long-term interest rates, not just in the
0:55.4	U.S., but across the developed world. We discussed the Fed, concerns about government debt and
1:00.7	deficits, inflation, tariff policy, and economic growth expectations in the context of some of
1:07.5	these potential headwinds. In the second hour, Jim and I focus our attention on the impact that some of the changes
1:14.0	discussed in the first hour may have on people's portfolios.
1:17.6	Specifically, we examine the resiliency or lack thereof of the 6040 portfolio and explore
1:23.4	strategies to reduce portfolio volatility in a world where stocks and bonds spend more time trading in tandem than they do trading apart.
1:31.3	We also explore the sources of continued dollar strength, U.S. equity concentration risk, recession risk,
1:37.3	and what the Chinese bond market, which has seen an accelerated decline in yields over the last several months,
1:42.3	continues to signal about the health
1:45.2	of the Chinese economy.
1:47.2	If you want access to that part of the conversation and you're not already subscribed
	...

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