Here's what's happening in the bond market

Matt DratchOct 2, 2026

Confluence of things. Oil has relaxed slightly the last 1-2 weeks and bonds don’t care, which I think suggests 1) hikes also didn’t help, 2) easy for shorts to bully the bonds bc buyers won’t step in ahead of a war resolution binary There’s a lot a lot of technical stop outs as well, firms forcing PMs to unwind their long bond positions, and that reflexively feeds into everything. Quant funds also near max short bonds A war resolution I think would reverse it / chill the bond mkt vol 6% would be a problem for equities, so key level for 10yr / back end

Discussion

Abhay Oct 2, 2026, 2:19 PM UTC

Kind of a meta question ... do you think its productive for people in tech to be thinking about bond markets? Some folks like Thiel seem to have made it part of their advantage ... and maybe others, like Taleb, would suggest that it's like predicting the outcome of a slot machine. It's all random and too abstract and far away from the ground level realities of building companies. Just follow the momentum and not try to giga-brain things (?)

Trace Cohen Oct 2, 2026, 2:42 PM UTC

If a war resolution could reverse this pretty quickly, how much of the move in the 10-year do you think is technical/positioning versus the market actually repricing inflation, deficits and the Fed? What would tell you this has gone from a temporary unwind to something more structural?

Matthew Schrager Oct 2, 2026, 4:05 PM UTC

I was at a client event a few years ago with a bunch of major asset managers etc. There was a speaker discussing the upcoming 2024 election, and the implications for the deficit, impact on bond yields, etc. I asked what felt like a dumb question: If we all agree that A) permanent giant deficits will eventually cause inflation and blow up the long end of the yield curve, and B) neither party seems to have any intention of reducing said giant deficits... why are bond markets so sanguine? The guy had no real answer, and a few years later, I feel like the question was a little less dumb.