I don't think we're in the danger zone. I think we're in the normal zone, which it's been a long time since we've been there. So it feels a little uncomfortable.

Okay.

Um, the German Vice Chancellor came out this morning and he said he blames these rising government bond yields exclusively on Trump's war in Iran.

And, you know, that's a bold statement to come out and say, and there's a lot of truth to it.

I think some of that might be true because I think some of it is nervousness, right?

That's right.

So, when you're dealing with that as the causation, it's hard to then manipulate it through policy moves at the Treasury.

So when you say though you don't think we're in the danger zone, where's the danger zone for you?

You know, I I think 4 to 6% on on the Treasury and the 10 year historically is where that yield should be. Um but, you know, in 2026, the yield was under four at one point. It's amazing how quickly this jump has happened in such a short period of time.

But Fed funds are still three and a half, 375 and and the long end of the curve has moved higher. It's not like Fed funds have moved up and so the long end moves up. It hasn't, right? Fed funds have stayed the same and yet the long end is moving up. Because I think the long end is dealing with there's a massive issuance of Treasuries as it's coming. There's a massive demand because of, you know, corporate demand, AI technology and all that corporate demand is is is um coming to the market.

I say that that's probably Kenny the the the biggest factor. Right. Even the Fed themselves acknowledged that hyper scalar issuance being hatched with treasuries explains the majority of the move they've seen in the long end of the curve. Less so about inflation or anticipating the Fed move, or even the fiscal deficit for that matter, even though it continues to be an issue.

Right. So do you where do you think rates are going to go? Where where where are you where do you think rates's going to be at the end of the year?

I think it's going to be still higher. From here. From here. But here there's a there's a reason. This is the economy that's growing a lot faster than we've had in the past years, right? And and it's going to grow even faster with all this issuance and investment coming in because a lot more coming in from here. I think that's what's really driving yields higher. So we could end up with the 10-year well over 5% and the 30-year going to 5 and a half or higher just because of economic growth.

Do you think that provides a headwind for stocks?

No, it would not. This would be the good reason

Because the economy's growing so much.

Precisely, exactly.

Okay, second quarter GDP, the second the second um round of second quarter GDP is coming out on Thursday. They say it's again 1 and a half percent. Yet they're already talking about third quarter being more than 3%. Do you agree?

Yeah, and in fact if you take the the real-time indicator from the Atlanta Fed, we're actually growing technically at 6% real GDP, right? So adding on inflation which comes out on Thursday is like around about 3, 3 and a half. This economy is actually growing at 9% nominal. That's right. That's why yields are going higher.

Right. But that's unsustainable.

I hope not because it would be great to grow Well, yeah, yeah, sure, because then we can grow our way out.

Right, you grow your way out of debt.

You know what the president says, he actually that's a good point he makes. To get out of debt, you should grow out of it. Okay. But you know, the challenges with with Hormuz as you were saying like that's that's probably the biggest uncertainty hanging over our economy.

Got it.

The other challenge that you alluded to earlier is the mom and pop investor all of a sudden saying, why take this risk in equities when I can just get five and a quarter,

So there's the danger. So that's that that's exactly right. So what's the danger zone? Five and a half?

Five and a half it starts to become a danger zone, but I think six is the magic number where all of a sudden you say,

What's the risk?

Six on the 10-year?

Six on the 10-year is where really equities start to look a lot less appetizing.