Yardeni Says Bond Market Has Been Rigged by Central Bankers for Almost Ten Years

The video discusses the current economic conditions, focusing on the Federal Reserve's gradual normalization of monetary policy and its impact on the bond market. It highlights the role of central banks in influencing bond yields and the concept of bond vigilantes. The relationship between bond yields and nominal GDP is explored, along with the potential effects on equity markets. The discussion emphasizes the importance of understanding how rising bond yields can affect market valuations and earnings, and the need for consistent earnings growth to sustain market prices.

What has been the role of central banks in the bond market over the past decade?

• They have only focused on equity markets.

• They have been the main sellers of treasuries.

• They have been the main buyers of treasuries and mortgage-backed securities.

• They have not influenced the bond market.

What is the 'bond vigilante model' based on?

• The relationship between bond yields and inflation rates.

• The relationship between bond yields and unemployment rates.

• The relationship between bond yields and nominal GDP.

• The relationship between bond yields and stock prices.

How have central banks influenced bond yields according to the transcript?

• By increasing them significantly.

• By selling off all their holdings.

• By keeping them low through large purchases.

• By ignoring them completely.

What could be problematic for equities if bond yields rise?

• A sudden inflation breakout without strong growth.

• A decrease in unemployment rates.

• A stable inflation rate.

• A decrease in interest rates.

What is necessary for market prices to remain stable in a rising rate environment?

• A decrease in inflation.

• Consistent acceleration in earnings.

• A decrease in bond yields.

• Stable interest rates.