Bond Yields Soar: Economic Growth, Inflation Concerns, and Sector Opportunities

**SPEAKER_1** (0:00)
Welcome back to Opening Bell. We're getting you ready for the trading day. Jeff Weniger is with us, Chief Investment Strategist at Corgi Invest. I'm so glad you are with us. Much to focus on on this first day of September. And of course, the sell-off in bonds, yields are higher at the highest level since January of 2025 for the 10-year. For Japan, it's 30-year highs. It's a global story, isn't it? What are your thoughts on what's going on in the world of bonds? And you're saying it's not necessarily the doom and gloom moment.

**Jeff Weniger** (0:33)
Subject that is the key one. It's dominating the social media fin twit type space. Everyone's talking about it. The three-handle in Japan is one of the big ones right now. But look, when we take a look, at least in recent memory, and by recent memory, I mean 2024, 2025, 2026, if you're thinking about the US long bond, you can picture a chart of that rising yields generally up, down, up, down, up, down in a 45-degree angle, up into the right with a raging bull market in equities by and large. I think we had in our analysis here at Corgi, we had six notable sell-offs in long bond yields. This would be the seventh in the last two or three years, and the stock market rallied in all of them.
I think, Nicole, and this is where I don't have all of the answers.
Imagine that, I don't have all of the answers, but I think you have to try to get to the bottom of why the sell-off is occurring. Is it necessarily fiscal profligacy or is there something else going on? I mean, look, the reality is, is the employment situation has been surprising to the upside in that it's not half bad. Everybody thought everything was going to be miserable, but look, the unemployment rate has gone from 4.5 percent down to 4.1. That's not exactly misery or anything like that. This is an economy that is gently expanding.

**SPEAKER_1** (1:58)
So we'll wait for another jobs report on Friday. But so for the moment, it is not the gloom and doom moment.
You used the word doom, so I definitely hopped in on that. But now, what do you think though, if we have a rising yield environment, that eventually could pressure things, no? I mean, how long can we tolerate a higher yield environment?

**Jeff Weniger** (2:24)
Well, I think that because the, in my opinion, and what we've been putting out at Corgi is that the yield curve has been steepening in that you just have to sell off and there's really no action here on the short end just yet. I mean, we haven't had really any move here by Warsh, that it is happening because we have an economy in expansion. The services sector is an expansion. Manufacturing is an expansion. We'll have to see when those PMIs come out. Last night, we had PMIs in Europe. It was a little bit of a mixed bag. Germany surprised the upside on the manufacturing side and you love to see if you're forecasting 2027 GDP growth for the world over or something like that. You love to see the German industrial machine doing well. I mean, I think bond yields are rising because it is looking past a lot of the consternation that we had gotten in the past with respect to tariff wars and that type of thing.
And the other issue is we'll have to figure out how much some of this is transitory, if you will, wink, wink on that. Nicole, on the inflation side, I would say that one of the concerns I have looking inside some of these regional manufacturing surveys is there is a lot percolating that looks like a supply demand crunch that could be doing a little bit of upside on inflation.

**SPEAKER_1** (3:46)
Yeah, we're waiting on, as you said, those PMI numbers and so those will be key. We did hear from Chicago, we got the Chicago print and that in fact was a surprise and showed PMI contraction. So didn't love seeing that. The last jobs report, not so great. So inflation had been coming down, but the last PCE print, not so great. So I guess we get some mixed data at that, and we have to continue to get more data in to really know where we are. But there's no doubt we've had a good economy and all that. And I think many of the guests would agree with you in the resiliency of the consumer, etc.
What are you looking for when it comes to the jobs report on Friday? And within the numbers, what details? It's my understanding we may get some more revisions from the Bureau of Labor Statistics for the prior months, even lower.