Sep 24, 2026 · 33 min
Listen from 21:18
Listen at 21:18
Bond yields test faith in U.S. fiscal management
Bonds Are Going Haywire Again — Howard Marks Explains Why
The episode connects higher borrowing costs, inflation fears, geopolitical disruption, and cooling AI infrastructure enthusiasm into one market-risk picture.
- 1Howard Marks says rising Treasury yields may reflect inflation fears, deficits, and investors demanding protection against weaker future purchasing power.
- 2The Iran conflict shows how uncertain diplomacy and a closed Strait of Hormuz could prolong energy and humanitarian pressures.
- 3SB Energy’s delayed IPO signals that investors may be questioning both lofty data-center valuations and the durability of AI enthusiasm.
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Howard Marks rejects an imminent financial-market collapse while warning that persistent deficits could steadily raise the cost of borrowing for the United States.
The brief
Rising Treasury yields are the episode’s opening warning: investors may be demanding more compensation for inflation, persistent deficits, and uncertainty about future purchasing power.
Howard Marks argues that a sudden financial collapse is unlikely, but sustained borrowing-cost increases could reflect growing dissatisfaction with U.S. fiscal management.
Marks’ sharper point is about timing: investors may anticipate debt consequences without knowing whether markets will react in years, decades, or through abrupt shifts in psychology.
The discussion then turns to Iran and the closed Strait of Hormuz, where uncertain diplomacy could delay energy normalization and amplify fuel, food, and wheat-export pressures.
Ed closes with SB Energy’s postponed IPO, suggesting skepticism toward a $50 billion valuation may be an early test of AI data-center exuberance.
What was said on this episode
20 statements · 5 positive · 15 negative
Persistent inflation is a main reason interest rates are rising
“I think the main reasons why rates are going up is because, number one, inflation is stubborn.”
Listen at 5:24
Strong capital demand is contributing to higher yields
“And then the third factor is that there's a very strong demand for capital at this time.”
Listen at 6:46
U.S. fiscal behavior has become more profligate
“And I do think that's a change. And I describe it as profligacy.”
Listen at 9:43
Persistently rising interest rates are more likely than an acute market failure
“And so I think your scenario of continuous rising rates is probably the more likely one.”
Listen at 11:23
Current interest rates remain low relative to historical levels
“today's interest rates look low to me, not high.”
Listen at 13:13
Interest rates probably will not decline much over the next one or two years
“interest rates probably will not be going down much if at all in the coming year or two, let's say.”
Listen at 15:11
Investors may want to reduce dollar-denominated asset holdings
“Maybe you want to hold less dollar-denominated assets.”
Listen at 16:37
Investors should make only limited reductions in U.S. assets
“given that the U.S. continues to be, I think, the best functioning developed world economy, if you were going to do any, I wouldn't do very much.”
Listen at 17:09
Investors cannot reliably predict when anticipated events will occur
“we sometimes have an idea what's going to happen, but we absolutely never know when.”
Listen at 18:10
The claim that inflation is solely caused by the war seems incorrect
“it just doesn't seem right to me.”
Listen at 20:46
U.S.-Iran talks could produce progress toward reopening the Strait before elections
“it wouldn't surprise me if those talks that were happening even as these tempestuous speeches were being given If those talks did eventually, before the election, the elections even bear some fruit in terms of progress towards a progressive reopening of the straits.”
Listen at 26:06
A full Strait of Hormuz reopening would take time to clear shipping backlogs
“even if there were a deal that quote-unquote fully reopen the Strait of Hormuz, it would take some time both to work through the backlog”
Listen at 27:13
Crude prices are unlikely to return to pre-war levels
“the price of crude is unlikely all things all other things equal to come back down to those pre-war levels”
Listen at 27:41
Energy-related costs will increase at least over the medium term
“we are going to see a medium term, at least, increase in costs.”
Listen at 27:48
War-related disruptions will make food more expensive or unavailable for millions
“There are going to be millions of people who are going to have either very much more expensive food or no food at all.”
Listen at 28:58
Diplomacy should seek Russia-Ukraine ceasefires covering energy and food exports
“trying to do some diplomacy that can sort out a deal between Putin and Zelensky, between Russia and Ukraine, to have a ceasefire on energy and a ceasefire on striking food exports would be really important as a priority.”
Listen at 29:07
The White House should continue efforts to resolve the Iran conflict before midterms
“I hope that there continues to be strong effort. by the White House to resolve the conflict before the midterms”
Listen at 29:54
SB Energy currently operates no data centers
“this company is BS. Despite calling themselves a data center company, they currently have zero data centers in operation.”
Listen at 31:28
Less than one-tenth of SB Energy's planned data centers are under construction
“less than a tenth of them are actually under construction.”
Listen at 31:42
SB Energy's solar revenue declined more than 8% last year
“Solar revenue fell more than 8% last year at SP Energy.”
Listen at 32:19
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.