Gold used to be crushed by moves like this in the 10-year. Not anymore

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The bond market is reacting contrary to expectations following the Fed’s pivot, with yields increasing significantly despite the Fed’s rate cuts. This indicates a lack of demand for bonds, driven by concerns over inflation, potential rate hikes, and the creditworthiness of issuers, which could lead to rising interest rates on various loans, creating serious economic challenges.

Rising bond yields can contribute to more inflation. When bond yields increase, borrowing costs for consumers and businesses rise, which can lead to higher interest rates on loans, mortgages, and credit cards. As borrowing becomes more expensive, spending may slow down, but if businesses pass on these costs to consumers, it can also lead to higher prices for goods and services.

Additionally, if investors are concerned about inflation and seek higher yields as compensation, it can create a cycle where the expectation of rising prices fuels further inflationary pressures. Overall, rising bond yields can signal underlying inflation concerns and contribute to a more inflationary environment.

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