Fed's Credibility Questioned, ‘Bond Vigilantes’ Return | Real Yield 7/30/2026

Summary

The episode examines the Fed's credibility and the bond market's reaction after a hold decision, with yields rising sharply. A macro roundtable debates inflation risks and curve positioning, leading to views favoring intermediate Treasuries (Ed Al-Hussainy) and long-duration sovereign bonds outside the U.S. (Nicolò Bocchin). The credit roundtable discusses an AI-driven debt boom, supply saturation, and hidden credit risks among smaller AI-linked firms, while Bryan Whalen argues for the attractiveness of the short end of the curve in Treasuries and high-quality corporates. The show also covers the Bank of England's steady rate decision and muni news including Dulles Airport plans and a Swarthmore College downgrade.

• Fed holds rates, provides no clear forward guidance, sparking a bond selloff and steepening yield curve.
• Ed Al-Hussainy sees value in intermediate Treasury yields and warns against long-duration risk.
• Nicolò Bocchin argues for very long-dated sovereign bonds in Japan, UK, and Germany as the best value in fixed income.
• Credit roundtable flags record AI-linked debt issuance and 'price-insensitive' hyperscaler borrowers.
• Bryan Whalen highlights short-end Treasuries and high-quality short-duration corporates as attractive.
• Whalen also warns of credit risks for smaller, leveraged AI ecosystem companies.
• Bank of England holds rates, with Governor Bailey indicating market pricing of a hike is sensible but not imminent.
• Muni moment covers a $20+ billion Dulles Airport renovation to be partly financed by municipal bonds.