5% Yields: 'Whole System Collapses', What Happens To Markets | Gareth Soloway

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Gareth Soloway (1:30)

Inevitably, this will end unbelievably badly. It's not a matter of if, it's a matter of when the whole system collapses at some point, as soon as we see a slowdown in capex from AI companies. We can all agree that if you took that out, we'd probably be in a recession right now. I don't think rates are going to, even if we go into a recession, the 10-year yield might go back to 4%, maybe 3.5. You're not going back to COVID levels because inflation is not going to magically go away, even in a recession.

David Lin (1:58)

The S&P 500 made a new all-time high today on Tuesday, October 6th. What is next? Well, our next guest, Gareth Soloway, Chief Market Strategist and President of Verified Investing, is saying that the 5% 10-year yield is not sustainable for the economy long-term. So he's going to reveal to us what's going to happen next for stocks, Bitcoin, gold and oil.

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So stay tuned. Gareth is going to give us his outlook and tell us where he thinks stock markets will land next. This video is sponsored by Kalshi. It's the largest prediction market in the United States. Unlike a sports book, you're trading peer-to-peer on real world events. Anything from political outcomes to economic data, and the price moves on public opinion, not a house. Go to the link in the description down below or scan the QR code here to get started and use my code LIN, new users who use my code can get $25 in app credits when you sign up and trade $25. Kalshi is CFTC approved and available in all 50 states, including California and Texas. Gareth, welcome back. Good to see you as always.

Gareth Soloway (3:30)

Hey, good to see you, David. Very, very nice to be here.

David Lin (3:32)

I asked you to come on the show yesterday, sort of an emergency interview, because yields have reached multi-decade highs. I'm talking about the 10 year and the 30 year. Now, we're speaking on Tuesday, October 6th, and the long end of the curve has come down somewhat, as oil has retreated a little bit. This comes as more oil has been flowing out of the Strait of Hormuz. Now, Gareth, tell us about the situation in the bond market first. What is the bond market responding to? Let's settle that, and then we can talk about what you think is going to be the direction.

Gareth Soloway (4:05)

Yeah, so the market is definitely responding to factors such as how strong the economy is, what is the inflation, long term projections. I mean, these are all factors that are helping keep rates elevated. And I also think, honestly, the fact that the Treasury, Scott Bascent, tried to intervene in the bond market actually worked in reverse. It made the investors that buy bonds, the countries that buy bonds, more nervous that the government would even think about trying to control the yield curve. And so all of these things have kept the yields to the upside. I think the other factor, too, is that there's so much competition now for debt, right? So you have AI companies selling debt, you have the government selling debt. And so when there's more debt, they have to raise the interest rate to lure the buyers in to buy that debt. And so it's weirdly a combination of the first factors and then also the competition for who's going to buy this debt when there's so much debt available out there to buy.