Bond Traders & The Bear Case

Each week, the Stokes Family Office staff puts together a list of our favorite news and updates on all things wealth management. From financial planning, portfolio construction, tax and estate planning, and retirement plan services to anything we found interesting. Enjoy this week’s curated list for your weekend reading as we focus on bond traders, the bear-case scenario, higher interest rates, and more!

ECONOMY NEWS

Thinking About Higher Interest Rates And The Demand For Money

• Scott Grannis: Rising interest rates appear to be driven more by stronger real economic growth and higher real yields than by inflation expectations, with healthy corporate profits, tight credit spreads, and favorable financial conditions supporting the case for a resilient economy. At the same time, high mortgage rates are putting significant pressure on housing, and the resulting slowdown in borrowing and home price appreciation could increase the demand for money, helping to reduce inflation and eventually lessen the need for further Fed tightening.

Related:

• • 2026 Stokes Family Office Quarter 3 Review
  • Bond Yields, Private Credit, and AI Demand
  • EVs, Interest Rates, & Economic Growth
  • Bonds, Bubbles, & Beijing
  • AI & The Bulls In Charge

MARKETS NEWS

A Bear-Case Scenario For The Long-Term, Diversified Stock Market Investor

• Sam Ro: Warren Buffett’s Berkshire Hathaway is such an extreme long-term winner that even a hypothetical 99% collapse today would still leave it ahead of the S&P 500 since 1965, highlighting the extraordinary power of compounding and the asymmetric upside of stocks. The broader lesson is that long-term stock investing benefits from gains that historically far exceed losses, meaning even sizable drawdowns often leave disciplined, long-term investors well ahead of their original cost basis.

Bond Traders Can Stop Panicking When the Fed Starts Panicking

• Jim Bianco: Fed officials’ “no urgency” messaging and a softer-than-expected payrolls report sharply reduced market expectations for an October rate hike, but Treasury yields, especially the 10-year, continued rising, suggesting bond investors remain concerned that monetary policy is too loose. The divergence between falling hike probabilities and elevated bond yields implies the market may actually want tighter policy and is signaling frustration that the Fed is not responding, risking even higher yields if officials continue to hold off on rate hikes.

CHART OF THE WEEK

With the 10-year Treasury yielding over 5%, bonds are offering income levels we haven’t seen consistently in over a decade. Historically, starting yields like these have been followed by mid-single-digit annual returns over the next seven years, though that’s an observed pattern, not a guarantee. Chart via Morningstar

Stokes Family Office is 100% Family Owned, and has been continually operating in the New Orleans Area for over 35 years.  As a family office, we are focused on family wealth, financial planning, and tax planning. We are your local experts for Gulf South wealth management.