The Return Of The Bond Market Vigilantes

Desmond Lachman 646 Follower s Follow 5 Share Save Play ( 6min ) Comment (1) Summary Since September 2024, the Fed has reduced its lending rate by 175 basis points from a range of 5.25–5.50 percent to one of 3.50–3.75 percent. Yet, over the same period, far from declining, the 10-year Treasury bond yield has increased by almost half a percentage point from 3.7 percent to its current level of 4.15 percent. Since March 2024, when the Bank of Japan ended its yield control policy, long-term Japanese government bond yields have approximately doubled to their highest levels in the past 25 years. Funtap/iStock via Getty Images James Carville, Bill Clinton’s political advisor, famously said that if there was reincarnation, he would like to return as the bond market. Then he would be able to force governments to do whatever he wanted them to do about This article was written by Desmond Lachman 646 Follower s Follow Desmond Lachman joined AEI after serving as a managing director and chief emerging market economic strategist at Salomon Smith Barney. He previously served as deputy director in the International Monetary Fund's (IMF) Policy Development and Review Department and was active in staff formulation of IMF policies. Mr. Lachman has written extensively on the global economic crisis, the U.S. housing market bust, the U.S. dollar, and the strains in the euro area. At AEI, Mr. Lachman is focused on the global macroeconomy, global currency issues, and the multilateral lending agencies.

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