The Truth Serum of the Bond Market
The 30 year is quietly breaking out. And it’s telling a very different story than the Fed.
Everyone keeps assuming the Fed is done. That rates peaked in 2023. That the next move is down.
But here’s the thing: the market disagrees.
The 30-year yield has been quietly grinding higher for most of 2025. It’s not a panic move—it’s a persistent one. Meanwhile, the Fed Funds rate has been flat for months. This disconnect isn’t new. It’s actually part of a pattern.
Chart of the Federal Funds Rate and the 30 Year US Treasury Yield:
In 2018, the Fed kept hiking into weakness. The 30-year had already started rolling over, but Powell & Co. didn’t listen. They tightened a few steps too far, broke credit markets, and had to pivot fast.
The bond market saw it first. The Fed followed too late.
In 2024, it happened again—only in reverse.
The Fed started cutting. And the bond market? It shrugged… then yields rose.
Because that cut wasn’t in response to a collapsing economy. It was a political and liquidity-driven move. The long end sniffed that out and started pricing in reflation instead of recession. While the Fed was easing, the 30-year was signaling: “This isn't over.”
Now, in 2025, we’re right back in that familiar tension.
On one side: a consensus that cuts are coming.
On the other: a long bond market that’s trending higher, signaling growth and sticky inflation.
There are levels to watch.
If the 30-year breaks above 5%, the market’s telling you that lower policy rates won’t stick.
If it drops below 4%, maybe the disinflation crowd gets their win. But we’re not there.
This is how I operate:
I don’t wait for the Fed to confirm.
I don’t trade what I hope happens.
I trade what is happening.
And right now, the message from the long end is loud and clear.
You want to know where we’re headed?