Bonds had a brief rally (i.e., yields fell) when the Fed raised the fed funds rate (the Central Bank discount rate). The fear in the markets had been that the Fed was going to become Trump's creature and go soft on inflation. The rise in the fed funds rate reduced that fear, and long-dated bond yields fell. That lasted just 2 days, and yields have now moved to new highs. Why? The same reasons as before. In particular, it's clear that the Iran war is not over, inflation is higher than targets, and recent data suggest that world economies are strengthening, meaning that there will be further rises in C.B. discount rates.
Tightening credit tends to cause economic slowdowns. And right now, the US economy is propped up by spending on AI, which is funded by venture capital and private credit, both of which rely on loose general credit markets. This developing credit crunch is not good for shares or the economy. Take care out there, people.
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