Sep 2, 2026 · 30 min
Long-term yields test bonds as markets weigh fiscal risk
Bloomberg Surveillance TV: September 2nd, 2026
The episode connects higher long-term borrowing costs to portfolio allocation, AI investment, Treasury-market stability, and looming energy-supply risks.
- 1Investors debate whether fiscal pressure, inflation, growth, or policy credibility is driving higher long-term Treasury yields.
- 2Gold gains appeal as bonds lose some ballast value and institutions diversify reserves amid concerns about fiscal policy.
- 3Venezuelan oil cannot quickly repair U.S. supply vulnerabilities as low fuel inventories raise the stakes of hurricane season.
Don't miss
Stephen Schork explains why Venezuelan oil cannot quickly replenish U.S. supply and why low refined-fuel inventories leave the market exposed during hurricane season.
The brief
Kate Moore remains bullish on equities while underweighting bonds, as investors weigh September volatility, earnings, growth, and the Federal Reserve’s next meeting.
The panel questions whether bonds still offer reliable protection in a downturn; Moore instead points to gold, reserve diversification, and institutional demand as reasons for its appeal.
Torsten Slok separates Fed expectations from the term premium, arguing that long-term yields reflect fiscal concerns, growth, inflation, policy credibility, and market structure.
Higher borrowing costs may pressure housing and autos, but Slok says expected AI returns remain well above financing costs, limiting the sector’s sensitivity to rates.
Slok warns that rising debt-service costs, more rate-sensitive Treasury holders, and basis-trade exposure could amplify volatility in the U.S. bond market.
Stephen Schork says Venezuelan oil cannot quickly solve U.S. supply needs, while depleted diesel, gasoline, and jet-fuel inventories heighten hurricane-season risk.
What was said on this episode
23 statements · 9 positive · 9 negative · 5 neutral
Kate Moore remains bullish on stocks.
“I am still bullish stocks.”
Listen at 3:06
Stocks will likely consolidate during September.
“we have to expect a bit of consolidation in September.”
Listen at 3:08
September consolidation will not change the overweight equity stance through year-end.
“that wouldn't stop us from being overweight and constructive into year end.”
Listen at 3:45
The economy remains strong and is in a sustainable expansion.
“we think the economic data remains very strong, that we're in a sustainable expansion.”
Listen at 4:19
Inflation will remain above the Fed target for some time.
“we're going to stay at a rate of inflation that is above Fed target for a while.”
Listen at 4:36
Kate Moore added a substantial gold allocation across most risk profiles.
“I added gold to the portfolio last year, a pretty considerable portion for most of the risk profiles.”
Listen at 6:11
Gold could outperform long-duration bonds and substitute for them.
“I thought could outperform long duration and could be a substitute for bonds”
Listen at 6:26
Gold is a viable additional portfolio asset amid geopolitical realignment.
“gold, I think, becomes a viable additional asset for a portfolio.”
Listen at 7:34
Treasuries may not rally during an economic downturn.
“I'm not confident they will.”
Listen at 7:50
Economic downturns increase government spending and worsen fiscal deficits.
“in an environment where you think in an economic downturn, government spending actually increases, that the fiscal deficit actually gets worse”
Listen at 8:06
AI will generate productivity gains across multiple industries.
“AI is going to lead to productivity gains across a variety of different industries.”
Listen at 9:15
Sustained equity earnings growth and free cash flow are less risky than bonds.
“sustained earnings growth and free cash flow is less risky than what you can get in the bond market right now.”
Listen at 9:34
Long-term rates are driven by Fed expectations and the term premium.
“Long rates are driven by Fed expectations and they're driven by the term premium”
Listen at 12:26
The term premium is driven more by Middle East events than fiscal conditions.
“it actually, if you just look at the term premium loan, has very little to do with the fiscal situation and has much more to do with what's going on in the Middle East.”
Listen at 14:15
AI investment and activity continue to advance.
“AI is still powering ahead.”
Listen at 15:46
Bond yields should continue rising amid strong growth and supply shocks.
“yields should be heading higher.”
Listen at 16:01
The Federal Reserve controls the front end of the yield curve, not the long end.
“they, of course, only control the front end.”
Listen at 16:05
There is no evidence the Fed is currently undermining the term premium.
“there's just nothing suggesting that that's what's happening.”
Listen at 17:02
Fed rate hikes would increase debt-servicing costs globally.
“if the Fed does start to hike... then the debt servicing costs everywhere will begin to move higher.”
Listen at 17:42
Venezuelan oil will need at least five to ten years to significantly affect global markets.
“We're talking at a minimum five years, if not 10 years, before Venezuelan oil makes a significant impact on the global oil market.”
Listen at 23:13
The Strategic Petroleum Reserve cannot logistically handle Venezuelan crude.
“The SPR logistically cannot handle that oil.”
Listen at 24:07
Venezuelan oil will not replenish the Strategic Petroleum Reserve.
“the notion that we're going to use Venezuelan oil to replenish the SPR is pure fantasy. It will not happen.”
Listen at 24:42
The SPR will reach significantly dangerous inventory levels by next year’s second quarter.
“by certainly by the second quarter of next year, when demand kicks in going into the summer, we are going to be at significantly dangerous levels with the remaining barrels sitting left in the SPR.”
Listen at 25:41
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.