Capital Flows
· Capital Flows
· August 15, 2026 at 16:25
· ⏱ 3 min read
| Read on Substack ↗
Summary
The bond bear market is structural because the 1988–2020 falling-rate regime has ended; higher nominal GDP, bear-steepening long-end yields, firm commodities, and financial-sector strength all point to continued upward rate pressure. That means bond duration, cash-like money-market holdings, and falling-rate investment playbooks are exposed, while higher-rate beneficiaries in financials remain supported.
•From 1988 through 2020, interest rates only moved down, hardwiring biases behind the 30-year mortgage refi playbook, the 60/40 portfolio, and the asset-management industry; since 2020 that regime is over.
•Roughly 42 basis points of hikes are priced into the terminal rate through 2027 even as the market argues over a September hold versus hike, and the long end is bear steepening.
•A long end that bear steepens through a Fed debate implies nominal GDP is running hotter than consensus believes.
•Inflation retraced its entire spike, yet bonds never caught a bid, which the author says answers why this is still a bond bear market.
•Crude holding its levels, corn and wheat bid, copper elevated, and a stagflation reading in the short-term macro impulse all indicate pressure on bonds is structural, not cyclical.
•Financials are rallying as rates rise and the 10s30s curve is bear steepening — the author says this does not happen in a collapsing economy, so the data suggests the system can withstand higher rates.
Article says 30-year yields are pushing back toward all-time highs, the long end is bear steepening, and bonds never caught a bid even after inflation retraced; TLT, as a long-duration Treasury ETF, i
Article says 30-year yields are pushing back toward all-time highs, the long end is bear steepening, and bonds never caught a bid even after inflation retraced; TLT, as a long-duration Treasury ETF, is directly exposed to continued structural bond selling.
Risk: If the Fed signals cuts or growth/commodity strength reverses, the long end could rally sharply and squeeze duration-negative positioning.
Article explicitly states financials, the sector most sensitive to delinquencies, are rallying as rates rise and that the 10s30s bear steepening does not happen in a collapsing economy; this supports
Article explicitly states financials, the sector most sensitive to delinquencies, are rallying as rates rise and that the 10s30s bear steepening does not happen in a collapsing economy; this supports financial-sector exposure as a beneficiary of higher rates.
Risk: Delinquencies and credit stress could still build with a lag if rates stay high longer than the current data implies.
This newsletter, published August 15, 2026,
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