This episode of On Investing looks at a market environment increasingly shaped by persistent inflation, rising long-term Treasury yields, fiscal concerns, and renewed trade tensions. Liz Ann Sonders and Collin Martin begin by discussing the latest inflation data, which continues to show price pressures well above the Federal Reserve’s 2% target. While wage growth is not driving inflation, they highlight several other forces keeping inflation elevated, including energy prices, tariffs, and the massive investment required to support the AI boom.
The conversation then turns to Treasury Secretary Scott Bessent’s efforts to influence long-term interest rates after yields surged. Collin argues that Bessent’s actions are understandable given concerns about mortgage rates and borrowing costs, but he views them as a short-term response to a much deeper issue: the nation’s growing debt burden and ongoing fiscal deficits. Both hosts suggest that attempts to manage yields address the symptoms rather than the underlying causes. They also explore the potential tension this creates with the Federal Reserve, which may prefer tighter financial conditions to combat inflation.
The episode closes with a look ahead to the Fed’s Jackson Hole conference, upcoming labor market reports, purchasing manager surveys, and other economic data that could shape expectations for both growth and Fed policy.
You can read the report Liz Ann mentions here: “Great Moderation Era: Drift(ing) Away.”
On Investing is an original podcast from Charles Schwab. For more on the show, visit schwab.com/OnInvesting.
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