Tech inflation threatens longer-term bond yields
The guest argued that massive price increases in memory and enterprise hardware will soon feed into general inflation statistics, potentially pushing the 10-year Treasury yield past 5%.
The argument
Ted Mortensen noted that memory prices have surged 68% sequentially, allowing hardware providers like Dell and HP to raise prices on enterprise customers at will. He argued this tech-driven inflation will impact long-term bonds beyond the Federal Reserve's control.
The thesis, stress-tested
✓ What validates it
- ✓The 10-year Treasury yield breaks above 5%
- ✓Tech hardware inflation metrics explicitly show up in CPI or PCE prints
▸ Risks discussed
- ▸Federal Reserve rate cuts could offset yield pressures
- ▸Memory price increases could stall if enterprise demand softens
Hear it yourself
"It's pretty bullish as it should be after I mean, most stock indices in The US are sitting at all time highs, and so I think people are very constructive. Unfortunately, when you get into that mode, you stop thinking about what could possibly go wrong. And I think that's the most important question to ask when you're bullish. And the answer this year, I think, is inflation. And LinkedIn to interest rates, Irene Timmer out on LinkedIn with a brilliant, brilliant chart, migrating the five percent thirty year bond a higher yield. Link out of consensus in the equity market with a 5.2, 5.4, five point whatever percent thirty year."
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