Bond Yields Hit 2007 Highs, Costco Cashes In on Inflation
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Why are U.S. bond yields reaching levels not seen since 2007?
Public.com presents the rundown, your daily market update in 10 minutes. My name is Zaydad Mani, and today is Friday, September 25th. In today's episode, we'll talk about why bond yields are at levels we haven't seen since the financial crisis and why AI might be making it worse. We'll also recap Costco earnings and why inflation. might be helping them. Then stick around to the end of the show to find out about a new feature on public that could change the way that you invest. We got a great show for you today. Let's go. Yesterday was kind of a quiet day for the stock market. The SP 500 was basically flat, down just 0.02%. And the NASDAQ was up just 0.01%. So not a ton of movement in the stock market. Bonds, on the other hand, though, they kept selling off.
The 10-year treasury yield climbed to around 5.2% late Thursday, that's the highest level since June of 2007, which was right before the financial crisis. The 30-year hit about 5.5%, and even the five-year crossed 5% for the first time since 2007. Now, as we've talked about in the last few weeks, there are many reasons why yields have been surging. Lately, though, the oil market has had the most influence on yields. The Wall Street Journal pointed out that the daily link between the 10-year Treasury yield and oil prices is the tightest it's been on record. So that means on the days that oil prices drop, yields also drop. And then on the days that oil goes up, yields tend to go up as well.
How could the US‑Iran Strait of Hormuz negotiations affect oil prices and yields?
Speaking of oil, there is big development on that front this morning. According to multiple reports, the US and Iranian negotiators are exploring a Bay's deal where Iran would reopen the Strait of Hormuz within seven days if the US meets Iran's conditions, like lifting their naval blockade of Iranian ports and unfreezing Iranian assets and ending the war on all fronts. The conditions that Iran wants are very similar to what was agreed to back in the June ceasefire, but that deal fell apart. So we'll see what happens from here. The market seems to be hopeful though, oil prices are moving a bit lower this morning on this news. Now, the other big macro news this week was President Trump's meeting with Chinese President Chi at the White House yesterday.
And Iran was one of the issues that they discussed. President Trump has been trying to get China involved in bringing Iran back to the negotiation table. On top of that, the US and China also agreed to extend their existing trade truce by another. Two months pushing the deadline to January 10th. I'll be honest with you guys, I kind of forgot about this trade truce and I wouldn't be surprised if it gets extended again. Big picture though, if we actually get progress with Iran and the Strait of Hormuz reopens, that could take some pressure off oil prices and potentially the bond market too. But you know, there are bond investors that think this is bigger than oil and that AI is playing a role here. AI is one of the biggest reasons that stocks
Are near record highs right now. And it also may be one of the reasons why bond yields keep climbing. The same AI spending boom supporting the stock market is also keeping the economy hot as well. And you know, these AI companies are spending billions of dollars and selling a ton of bonds to pay for it, which competes with the US Treasuries for investor money. And that's pushing up yields as well.
In what ways is AI spending driving higher Treasury yields?
And by the way, higher rates probably won't slow down AI spending very much because if you're a giant tech, Tech company and you think a data center could generate huge returns in the future, a 5% treasury yield probably isn't gonna make you cancel your project. And that's gonna put the Fed on a very tough spot because if AI spending refuses to slow down, well, the Fed's gonna have to put even more pressure on everything else to slow the economy to get inflation under control. And that's why a lot of people think bond yields could keep rising. According to a Bloomberg survey this week, more than half the respond. And said the 30-year treasury yield is gonna hit 6% by the end of the year.
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Chapters
8 chapters
1
Why are U.S. bond yields reaching levels not seen since 2007?
0:00–1:37
2
How could the US‑Iran Strait of Hormuz negotiations affect oil prices and yields?
1:37–3:16
3
In what ways is AI spending driving higher Treasury yields?
3:16–4:56
4
What made Costco’s latest earnings report so strong?
4:56–6:40
5
How is Costco using its tariff refund to lower consumer prices?
6:40–8:13
6
Why is Akamai’s deal with Anthropic causing its stock to surge?
8:13–9:45
7
What are the reasons behind Nike’s recent downgrade and sales slump?
9:45–10:47
8
How are Public’s new prediction‑market and AI tools changing investing?
10:47–10:49
Speakers
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