Bonds To Reverse Soon As Yields Approach 'Line In The Sand'? Michael Lebowitz

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**Michael Lebowitz** (1:30)
I'm not dumb. I realize that it's the narratives that are the short-term driver of bond yields. Bond yields can go higher from here.
I do think that 10-year bond yields at 5% is potentially a line in the sand for both the economy, the stock market, and definitely the Treasury and possibly the Fed.
We're pretty close to 5% at this point. In the short run, that may be our maximum upside-in yield.
And I think if the economy falters, the stock market falters, that could induce rates to start heading down, yields to start heading lower.

**Adam Taggart** (2:15)
Welcome to Thoughtful Money. I'm Thoughtful Money founder and your host, Adam Taggart. Welcome you here to a discussion with Michael Lebowitz from Real Investment Advice. Michael, thanks so much for joining us today.

**Michael Lebowitz** (2:26)
My pleasure. There's a lot going on, so it's probably appropriate.

**Adam Taggart** (2:31)
It's appropriate and there's just a lot that's been going on with bond yields. And so I've had a lot of people saying, hey, can you get Mike back on just to kind of tell us what's going on with bonds since he's a big bond expert. So Michael, bond yields are, they've continued to just grind higher and higher to yields that we haven't seen in like two decades or so on the 10 and 30 year US Treasuries. So I know that at RAA, you and your partner in crime there, Lance Roberts, are at a point of view that bond yields will be coming down over the next couple of years for a bunch of secular reasons.
But I think the question from the Peanut Gallery is, is you're still holding to that outlook? Are you starting to sweat it all given what's been happening over the past couple of months? What is the deal with bond yields?

**Michael Lebowitz** (3:25)
Lance and I probably sound like a broken record here. We've been saying this for a while and they were coming down and then Iran kicked in, tariffs kicked in. So one of our themes is that there's bond fundamentals and there's bond narratives. At the end of the day, historically, fundamentals drive yields. There's a very, very high correlation. I've shown charts on with you before, just showing the very high correlation really between inflation and inflation expectation and bond yields. But in the meantime, a narrative, and a narrative can be true or false, but a narrative can take over and drive a market. We see it in the stock market all the time. There's a narrative behind the memory chip companies, behind the AI companies, behind meme stocks, behind gold and silver, behind crypto. We've seen one after another. And those narratives at times can divorce a price from its fundamentals. AMC and GameStop are two great examples. Where the price is shot through the moon, the fundamentals of the two companies were not that good. And ultimately, price or in our case, yield comes back to fundamentals. And what we see today is a divergence between fundamentals and narratives. And it just seems like it's just one story, one narrative, one thing hitting the bond market after another. And I think it's just because the bond market is susceptible. It's going higher in yield, lower in price. And I think just everyone's scared and just thinking yields are going to go to the moon.
But if you kind of, you know, this is appropriate that we're talking to because the Fed meets a week from tomorrow, a week from today.