Bonds & Equities Have Not, Recently, Hedged Each Other: CHART OF THE DAY
Three tails, no safe asset: war, Trumpism, & the end of 60/40 comfort…
No, financial markets are not confident that there is a groove the macroeconomy is likely to follow. The marvel to me is that they had not woken up to the risks involved in Donald Trump’s chaos-monkey governance long ago. Plus the belief by plutocrats that kleptocrats are their friends has to have been at least somewhat shaken by the Trumpists’ moves against Anthropic, which have no rational rationale save as a message that Anthropic has not offered them a big enough bribe yet:
10-Yr inflation breakeven are now back to where it was in late February, with implicit real ten year yields 0.4%-point higher. Combine this with higher equity prices, and the sensible explanation is increasing mass in all three tails: the interest-rate spike crisis tail, the inflation-outbreak tail, and the AI-boom-proves-durable tail:
Phil Serafino: Higher Bond Yields Are Here to Stay in a Post-War World <https://www.bloomberg.com/news/newsletters/2026-06-17/higher-bond-yields-are-here-to-stay-in-a-post-war-world>: ‘Higher for longer…. The fallout from the Iran war is likely to reverberate around markets for months to come…. Market pricing points to Fed rate hikes in 2027…. “We would be cautious about chasing the relief rally in government bonds,” said Thomas Hempell at Generali Investments, “particularly in the US, where large fiscal deficits and still-elevated inflation are likely to keep term yields under upward pressure.” Yields on benchmark 10-year Treasuries have risen almost half a percentage point since the Iran war started… driven by… real yields…. Vond investors’ concerns go beyond price pressures from the conflict. —Georgia Hall, Ruth Carson and Ye Xie…