BAD BONDS

The 10-year Treasury term premium is up 60bps since early April and is 100bps above its past decade norm. The rise isn’t due to expectations of faster growth, nor rising inflation expectations, the usual culprits behind rising rates. The rising term premium is due to massive trade/tariff uncertainty and expectations of a widening in the already irresponsibly large budget deficit. This will largely negate any stimulus from tax cuts.