(Bloomberg) -- Veteran market strategist Ed Yardeni says investors are taking the run-up in Treasury yields in stride and looking through inflation caused by the energy-price spike from the Iran war.
"I kind of view bond yields of 4 and a quarter percent to 4 and three-quarter percent as normal — I'm not getting freaked out by it," Yardeni said Tuesday on Bloomberg Television's Surveillance, alluding to benchmark 10-year Treasuries. "The US bond is still viewed as the safe haven, and there's plenty of reasons to worry about things these days."
The yield on the 10-year has eclipsed 4.48% this year, while the 30-year bond yield surpassed 5.03% on May 4. Those changes represent jumps of more than 50 and 40 basis points in 2026, respectively.
Should yields continue to climb, however, Treasury Secretary Scott Bessent may consider cutting the issuance of bonds in favor of bills, said Yardeni, chief investment strategist at his eponymous Yardeni Research. Yardeni is known for coining the term "bond vigilantes" and also has the highest S&P 500 target, at 8,250, among strategists tracked by Bloomberg.
"I don't think they're going to just kind of sit there and let the bond yield go from 5 to 6%," Yardeni said. "Treasury Secretary Bessent has the appetite to do what he was against doing when Janet Yellen did it, and that is issue more bills and fewer bonds."
Before becoming secretary, Bessent repeatedly criticized predecessor Janet Yellen, saying she had boosted reliance on short-term bills to fund the deficit. While Bessent said she did so to juice the economy by sending long-term rates lower, he retained her plan after taking office.
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