Jim Grant: A Multi-Decade Bond Bear Market Lies Ahead

**James Grant** (0:00)
I am of the view that something important happened around the year 2020 and 2021, those two years. And I believe what happened was the end of a 40-year bond bull market. And I speculate the beginning of a, of a bond bear market, which on form is likely to run not for fiscal quarters or years, but perhaps for decades.

**Adam Taggart** (0:33)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. When today's guest was last on this program back in June, he predicted that interest rates would remain higher for longer. And the ensuing seven months proved him correct. With inflation remaining stubbornly sticky, new tariffs and other disruptive policies announced by the Trump administration, trillions of dollars in US Treasury debt to mature this year and the return of the bond vigilantes, where are interest rates most likely to head from here? To find out, we've got the great fortune of speaking today with perhaps the world's foremost living expert on interest rates, James Grant, founder and editor of the highly respected market journal, Grant's Interest Rate Observer. Jim, thanks so much for joining us today.

**James Grant** (1:17)
Well, thank you, Adam. And thank you for that extravagant introduction. I want to just own this title of interest rate guru. I'm an authority on where interest rates are.
And I am competitive on the question of where they have bit. As to where they're going, it's a whole new ballgame.

**Adam Taggart** (1:37)
It's a toss up, is what you're saying? Well, let's throw the ball in the air and let's see where you tip it.

**James Grant** (1:42)
Okay.

**Adam Taggart** (1:44)
All right. So lots of questions for you. And we're talking actually at a very timely moment. We just got new inflation data that just came out this morning, that hotter than Wall Street clearly wanted. We'll talk about that in just a second. But if we can, Jim, I'd like to kick this conversation off with the opening question I usually ask our guests. What's your current assessment of the global economy and financial markets?

**James Grant** (2:10)
Well, I am the kind of guest who's not going to answer that, Adam, because I wasn't born yesterday. I mean, it's so amorphous. The global economy is just bigger than all outdoors.
I think it's a reminded of Charles de Gaulle, when he was asked about, I think, China or India. And he said, big country, lots of people. So, I can venture the comment that with Donald J. Trump in the White House, things are most interesting. And I think there are interesting occurrence having to do with the dollar, the nature of the dollar, and the place of America and the world's monetary system. So, that's as global as I care to be on this. It's a worthy question, to which I have no worthy answer. I took five minutes in saying I don't know. I'm going to try to be more efficient from now on.

**Adam Taggart** (3:27)
Don't worry. Yeah, I like how you zig when I thought you were going to zag, but don't worry, I'm still going to run the pattern, and I think we're still going to get the football in your hands here. We're also going to see how many sports analogies I can come up with during this interview.
Okay, well, look, I want to go into all those things, the dollar, your thoughts on the new Trump policies, etc. But why don't we start with inflation? So the morning we're talking here, like I said, I think the CPI came in. I only had a chance to skim the headlines, but it looks like the CPI came in at 3.0. I think the expectations were 2.9. There's enough data in there to make the market feel like, this is stickier than we had hoped. Markets are down, at least at the open here. Like I said in the intro, when you and I talked seven months ago, you had correctly said, look, I think inflation is going to prove stickier than folks want, and I think that's going to keep interest rates higher than folks want. That seems to have been the script so far. As you continue to look out, and I won't make you look out too far, but kind of rest of the year-ish or so, are you still kind of thinking it's going to be higher and stickier for longer?

**James Grant** (4:41)
So by way of preface, I am of the view that something important happened around the year 2020 and 21, those two years, and I believe what happened was the end of a 40-year bond bull market. And I speculate the beginning of a bond bear market, which on form is likely to run not for fiscal quarters or years, but perhaps for decades. That's the form. Since the middle of the 19th century, interest rates have tended to trend in generation-length phases.