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June 2, 2025
Long-term yields are loosely tied to nominal GDP growth. Nominal means real growth plus inflation. Indeed, we find that long-term bond yields should and do approximate nominal GDP growth.
Today's topics include U.S.-China shipments are still flowing, how are tariff-impacted stocks trading?, Fedspeak, 'Sell in May & go away' backfires in 2025, more on tariff court ruling, the state of the labor market, the state of the housing market, American military might versus China's booming capacity, the future of Fannie & Freddie, what is Section 899 in the 'big beautiful bill?', and quantifying EU-US business relationships
Despite many concerns over the U.S. fiscal situation and rating downgrade, this past week's Treasury auctions were solid.
As reserves continue to be drained from the system, Fed officials are undoubtedly watching SOFR for signs of strain.
Given the surge in immigration during the previous five years, a breakdown of the labor force gives clarity to the strength behind the U.S. economy over the same period.
Over half of all sovereign debt yields at least 4%, making it a competitive alternative to stocks.
For the last few decades the U.S. has been in a low interest rate environment where deficit spending would not cause major issues. A 40-year high in inflation and the higher rates that followed are stressing the country's finances.
Some interesting charts from our recent posts
Jim Bianco joins Fox Business to discuss Wall Street's Rules, Tariffs & the Bond Market's Message with Charles Payne.