Yardeni Warns Treasury Yields Are Heading Toward 'Dangerous Levels'

Yardeni reportedly identified the unwinding of yen carry trades following BOJ rate hikes as the single explanation for rising global interest rates in a Bloomberg interview. He says the United States is booming amid consumption, capital spending, hyperscaler borrowing, and enormous deficits, and that a positive interpretation is possible because real interest rates are driving the rise in nominal interest rates. He warns that France offers no scope for a positive interpretation, with déjà vu of the Greek debt crisis, and is heading into the danger zone of a doom loop. He says the favorable end of the interest rate scenario spectrum is a rise in the neutral rate resulting from stronger-than-expected growth, reports France's march toward 4.9% and the United States' toward 5.5%, and discusses rates settling at 5.5~6%. Bond vigilantes are not yet scrutinizing the US deficit, but could do so if conflict escalates, war costs rise, and deficits expand around the midterm elections. Comparing a 10 year yield of 5.5% with nominal GDP growth of 6~6.5%, he identifies 6% or higher as the threshold for genuine concern. He mentions the economy's reduced sensitivity to interest rates and AI borrowing's new role as Treasury debt, says fiscal policy rather than the Fed is the problem, and describes Bessent's bazooka: Treasury buybacks and expanded T-Bill issuance. He says the speed of reaching 6% is crucial and that a rapid rise would require Fed liquidity facilities amid financial cracks. He concludes by noting that he announced a shift to a cautious market stance in mid-September (month 9). All directional outlooks are the speaker's conditional judgments, not definitive predictions of short-term prices.