Bond Vigilantes Smell Blood in the Water... -

Treasury Secretary Bessent insists on challenging the bond vigilantes, and neither side is backing down. The underlying trends are pointing toward volatility ahead… and potentially much more.
What an interesting macroeconomic picture is being painted at the moment.
I’m afraid it will be “interesting” not in a “well, that’s fascinating” way, but something closer to the old Chinese curse, “May you live in interesting times.”
There’s a lot I could cover in this regard, but much of it can be summarized by the observation that Treasury Secretary Scott Bessent is busily talking <a href="https://www.moneymetals.com/news/2026/09/10/treasury-department-announces-even-bigger-bond-buyback-market-shrugs-005192">Treasury bond yields down</a>… while Fed Chairman Kevin Warsh is just as busily talking Treasury bill yields up.
And it increasingly looks like both are going to be disappointed in the results.
For his part, Bessent has been challenging the market to a duel on bond yields, and the market is taking up the challenge. As I <a href="https://x.com/Brien_Lundin/status/2098039733142147379?s=20" target="_blank" rel="noopener">posted on X last week</a>:
<img src="https://www.moneymetals.com/uploads/content/Blood-in-the-water-X-Brien-Lundin.png" width="800" height="629" class="mx-auto p-3" alt="" />
As that blood drips into the water, the sharks are getting more numerous and excited. Consider the trajectory of the 10-year Treasury yield:
<img src="https://www.moneymetals.com/uploads/content/10-Year-Yield-Futures–1-.jpg" width="800" height="739" class="mx-auto p-3" alt="" />
There’s a bullseye on 5%, and the market usually gets what it wants.
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Moving to the other end of the curve, Warsh might get his higher rates even without resorting to the rate hike that everyone now expects. Given President Trump’s promise last week of a cool $5,000 payment to every adult citizen (at an estimated $1.2 trillion cost), it’s likely that vigilantes demanding higher returns won’t be limited to bonds but bills as well.
Regardless, with diesel prices soaring to record highs and other inflationary flashpoints becoming evident in last week’s CPI report, even I have to acknowledge that Warsh will likely post a quarter-point rate hike next week to rebuild some credibility for the central bank.
But the math still doesn’t work for any kind of an extended rate-hike campaign.
And in fact, outside of the most recent spate of price weakness in gold, <a href="https://www.moneymetals.com/news/2026/09/10/debasement-trade-gains-ground-as-nations-reassess-dollars-bonds-and-gold-005191">bond yields and the gold price</a> have been rising hand-in-hand. I featured a chart of this in last week’s Golden Opportunities, showing how the two have been largely positively correlated since late June.
This correlation isn’t a good sign for either Bessent or Warsh, because it evidences the market’s doubt regarding the future value of the dollar.
In addition, as I’ve been writing and saying recently, I think gold and bonds are sniffing out some trouble ahead. A 5% 10-year Treasury yield looms directly ahead, and that could be a trigger point for a very significant equities sell-off. That bubble has been searching for a pin for some time, and this just might be it.
As I <a href="https://x.com/Brien_Lundin/status/2098926416188297461" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://enews.jeffersoncompanies.com/q/usgI2Ldtu_a7YHJj0X1NPnLzM4EUVU5uULAZcOJU1RFRkFOLkdMRUFTT05AaW5kZXBLlbmRlbnRsaXZpbmdidWxsaW9uLmNvbcOIviO67SgwcLIMWVqmZWEZ0bohuQ&amp;source=gmail&ust=1789499188073000&usg=AOvVaw1Ze5VbGETzoTqvCN8_ptaM" rel="noopener">posted</a> recently on X:
<img src="https://www.moneymetals.com/uploads/content/10-year-yields-Brien-Lundin.png" width="800" height="414" class="mx-auto p-3" alt="" />
In the meantime, the metals have been victimized by the emotional swings of the Western traders, and with the odds of a Fed rate hike this week rising toward 100%, gold is trading down again today.
However, that’s to be expected as a rate hike looms. And, importantly, these instances have typically marked take-off points for gold.
As long-time readers will remember, I called the gold bottom in December 2015 as the Fed’s first rate hike was days away. From that point on, gold and silver soared, and many of our junior stock picks multiplied four to five times in value over the next six months.
In this case, I predict we’ll soon have a resumption of the <a href="https://www.moneymetals.com/news/2026/09/05/brien-lundin-debt-debasement-and-why-golds-bull-market-has-support-005186">long-term gold bull market</a>.
To get Brien Lundin’s ongoing commentary on the markets at no charge, <a href="https://goldnewsletter.com/golden-opportunities-sign-up/?tblci=GiBdY-MYH1-nD-WW6UXCXAtHBPIEdPpDc50r48qPeOICrCDKuWUow8jry8SFw-EvMLzYPQ" target="_blank" rel="noopener">click here</a> to subscribe to his free Golden Opportunities newsletter.

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