Behind the video
oh f**k me
Overall Thesis
Kevin expects the rise in Treasury yields to slow and reverse, supporting equities, and believes financing will continue sustaining the AI investment boom. He nevertheless examines the possibility that tightening liquidity, higher yields, and failed Iran negotiations could undermine his bullish outlook.
Narratives
Kevin believes the rise in the 10-year Treasury yield is decelerating and expects yields to anchor around 5.27% before declining, which would support stocks. He explicitly considers an alternative in which his peak estimate fails and yields rise toward approximately 5.6%.
Key Arguments
- The last five days show a flatter yield trajectory than the rapid increase visible over six months.
- An intraday reversal in yields coincided with a recovery in equities.
- He interprets threatened U.S. strikes against Iran as negotiation tactics and expects pressure for a political win to favor de-escalation.
- He disagrees with the quoted technical analysis that describes long-duration Treasury yield increases as accelerating.
Risks acknowledged
- The 5.27% level may be nowhere near the ultimate peak.
- An approximate comparison with historical TLT downside suggests the 10-year yield could reach about 5.6%, but the comparison is imperfect.
- Quoted analysts see further upside in 30-year yields; Kevin does not endorse their targets.
- Heavy government and corporate issuance may constrain cash available to absorb additional debt.
- Iran negotiations could fail, and the yield-curve spread signals vulnerability to shocks.
TLTiShares 20+ Year Treasury Bond ETFKevin uses TLT's historical support breaks to assess the risk to his Treasury yield outlook. His expectation of falling yields is supportive of long-duration bonds, but he acknowledges that a repeat of the previous support failure could imply further downside.
Key Arguments
- He identifies a historical support area around $78.77 that previously held multiple times.
- The prior break below that area was followed by approximately another 5% decline.
- He uses that historical move as a rough stress scenario for his current yield thesis.
Risks acknowledged
- TLT's long-duration holdings differ from a 10-year Treasury.
- ETF flows and bond maturities make the relationship with the 10-year yield imperfect.
- Higher yields and tighter financing conditions could undermine the favorable bond outlook.
Hedges & Caveats
- He repeatedly acknowledges that his yield-peak thesis could be wrong and that he could lose substantial money.
- He considers approximately 5.6% a possible downside scenario for the 10-year yield if his thesis fails.
- TLT is an imperfect proxy for the 10-year yield because its duration, holdings, and fund flows differ.
- Rising repo rates suggest pressure on available financing, although the quoted reporting does not describe broad credit deterioration.
- The 10-year versus 2-year yield spread indicates elevated vulnerability to shocks.
- An Iran agreement is uncertain, and geopolitical escalation remains possible.
- He describes the AI investment cycle as a bubble despite expecting it to continue.