The Long Bond Yield Is Signaling A Huge Fear Of Inflation

The 30-year long bond yield is just 17 BPs from a new 18-year high.

Since April 21, the long bond yield is up from 4.866 percent to 5.010 percent, a rise of 14.4 basis points.

After ignoring gyrations in the oil markets, the yield started rising with oil prices.

On April 24, I asked All Quiet on the Long-Bond Front. How Long Can This Last?

The 30-year bond has been remarkable stable given wild stock and oil market gyrations.

We are not at the breakout point yet. However, it now seems more likely than not.

30-Year Long Bond Monthly Detail

The breakout point is 5.18 percent. That’s just 17 basis points away.

Technically Speaking

Ascending triangles are a bullish formation, bullish meaning the expected move is up, not that anyone would describe rising inflation and yields as bullish.

The implied target is 5.18 minus 2.86 plus 5.18. That would be 7.5 percent.

Heaven help us if we were to get there. I don’t think we do, either.

But if yields do break out, a minimum target would be a test of the 18-year high at 5.44 percent, nearly a half-point higher.

Target Rate probabilities for April 2027 on 2026-04-29

We had roughly an 8-basis point move from yesterday to today looking all the way out to April of 2027.

That’s about a third of a quarter-point tightening bias.

Q: What happened?
A: Oil

For discussion, please see Trump Says He’s “No More Mr. Nice Guy”, Oil Jumps 5 Percent to $105

An economically illiterate trump warns the markets.

It remains to be seen how much more pain Trump, Iran, or the world will take.

Fundamentally Speaking

Earlier today, I commented There’s Upward Pressure on Interest Rates With a Slight Bias for Fed Hikes

The longer the blockade lasts, the more upward pressure there is on the price of oil, gasoline, diesel, aluminum, fertilizer, and interest rates.

The price of oil is far more important than anything Powell says today.

Trump has stated he is willing to hold the blockade until Iran caves into his demands.

The bond market does not like that idea to say the least.

Oil Price Movements

The price of oil blasted seven percent higher today. It’s 107.22 per barrel as I type.

That is not yet reflected in the price of gasoline, which rose to a new post-war high. For discussion, please see National Gasoline Prices Hit the Highest Level Since Start of War in Iran

Hello warmongers. Are you watching gasoline prices?

In edit, that was two days ago. Prices rose again today, and they will rise again tomorrow.

For about a month, the long bond yield seemed unconvinced on direction. It’s pretty clear now that the next move is higher unless there is a very sudden negotiation development.

The die is cast. Brace for more inflation and higher yields.