Bond Yields Hit 2007 Highs, Costco Cashes In on Inflation
The Rundown
The episode explores significant shifts in the bond market, where yields have reached levels not seen since before the 2008 financial crisis
Key takeaways
- The 10-year treasury yield climbed to approximately 5.2%, the highest level since June 2007.
- AI companies are driving bond issuance to fund data centers, which competes with US Treasuries and pushes yields higher.
Main topics
- Rising bond yields and the impact of AI spending
- US-Iran negotiations and oil price correlations
Notable quotes
The 10-year treasury yield climbed to around 5.2 % late Thursday as the highest level since June of 2007.
Conclusion
The episode highlights a market caught between high-growth AI investme
Transcript preview
Speaker 1 (0:00) Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Friday, September 25th. In today's episode, we'll talk about why bond yields are at levels we haven't seen since the financial crisis and why AI might be making it worse. We'll also recap Costco earnings and why inflation might be helping them. Then stick around to the end of the show to find out about a new feature on public that could change the way that you invest. We got a great show for you today. Let's go. Yesterday was kind of a quiet day for the stock market. The S &P 500 was basically flat, down just 0.02%. The NASDAQ was up just 0.01%. So not a ton of movement in the stock market. Bonds, on the other hand, though, they kept selling off. The 10-year treasury yield climbed to around 5.2 % late Thursday as the highest level since June of 2007, which was right before the financial crisis. The 30-year hit about 5.5%, and even the five-year crossed 5 % for the first time since 2007. Now, as we've talked about in the last few weeks, there are many reasons why yields have been surging. Lately, though, the oil market has had the most influence on yields. The Wall Street Journal pointed out that the daily link between the 10-year treasury yield and oil prices is the tightest it's been on record. That means on the days that oil prices drop, yields also drop. And then on the days that oil goes up, Yields tend to go up as well. Now, speaking of oil, there is big development on that front this morning. According to multiple reports, the U.S. and Iranian negotiators are exploring a phased deal where Iran would reopen the Strait of Hormuz within seven days. if the US meets Iran's conditions, like lifting their naval blockade of Iranian ports and unfreezing Iranian assets and ending the war on all fronts. The conditions that Iran wants are very similar to what was agreed to back in the June ceasefire, but that deal fell apart. So we'll see what happens from here. The market seems to be hopeful, though oil prices are moving a bit lower this morning on this news. Now, the other big macro news this week was President Trump's meeting with Chinese President Xi at the White House yesterday. And Iran was one of the issues that they discussed. President Trump has been trying to get China involved in bringing Iran back to the negotiation table. On top of that, the US and China also agreed to extend their existing trade truce by another two months, pushing the deadline to January 10th. I'll be honest with you guys, I kind of forgot about this trade truce and I wouldn't be surprised if it gets extended again. Big picture though, if we actually get progress with Iran and the Strait of Hormuz reopens, that could take some pressure off oil prices and potentially the bond market too. there are bond investors that think this is bigger than oil and that AI is playing