Lead-Lag Live

Navigating Rising Yields

16 snips
May 25, 2025
In this engaging discussion, Jim Bianco, a macroeconomic expert and leader of Bianco Research, teams up with Jay Hatfield, a seasoned macro strategist managing $2.6 billion at Infrastructure Capital. They delve into the paradox of rising Treasury yields amidst Fed rate cuts and the implications for investors. Hatfield introduces his "Hopfield Rule," linking housing starts to potential recessions, while Bianco highlights the powerful influence of retail investors in stabilizing markets. The duo also examines the effects of fluctuating oil prices and the evolving landscape of inflation.
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INSIGHT

Fed Policy and Yield Paradox

  • The 30-year Treasury yield nearing an 18-year high signals major market tension.
  • The paradox is that rate cuts last September caused yields to rise, showing complex inflation fears at play.
INSIGHT

Housing Starts Predict Recession

  • Falling housing starts below 1.1 million have historically preceded most recessions, per the "Hatfield Rule".
  • High mortgage rates and slow housing may push the economy closer to recession than expected.
INSIGHT

Housing Prices Defy Rate Cuts

  • Home prices per square foot remain at all-time highs despite softening market data.
  • Mortgage rate cuts may not reduce monthly payments if house prices adjust upward.
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