Two reporters for The Australian Financial Review wrote in the weekend edition:
“Soaring borrowing costs are unnerving investors, who fear chaos in the bond market will push the global economy into recession.”
There’s no doubt there’s also plenty of market noise reinforcing this message.
The Australian share market is down for the year, and crude oil recently rose to above US$100 ($140) a barrel.
The 10-year US Treasury yield has hit 5% in recent trading, too — considered a dangerous high-water mark for some.
And yet some bond market veterans seem more sanguine about the situation.
One of them is Harley Bassman, who invented the MOVE (Merrill Option Volatility Estimate) Index, a widely used measure of bond market volatility on Wall Street.
He said in a recent published update that the notion of a “market Armageddon” is “silly”.
Several data points appear to support his contrarian take.
One of them is the price of gold.
At around US$4,300 an ounce, gold remains well below the all-time high of US$5,600 set in January.
If gold investors truly believed the US bond market, worth trillions of dollars, was at high risk of implosion, the gold price would be running hard as investors moved to protect themselves.
That’s not happening. Instead, the gold price has generally been falling in September.
There is also notably little action in bitcoin, another asset considered a hedge against the risks associated with ‘fiat’ currency-backed bonds.
Bitcoin also remains well down from its all-time high of US$126,198 set in October 2025 — almost a year ago. Bitcoin is now around US$77,640.
Two key financial instruments, often seen as hedges against fixed-income turmoil, are not signalling that a major recession or market calamity is close.
Another largely overlooked indicator in recent reporting about a potential recession is US employment.
Charlie Bilello is the chief market strategist for a wealth management firm called Creative Planning.
He wrote the following about recent US labour market data:
“The job losses of late 2025 and early 2026 have reversed course and over the last six months 107,000 jobs per month were created. That’s the strongest job growth on a rolling six-month basis since the middle of 2024.”
He also included the below chart to show that US unemployment has been below 5% for 60 months, the second-longest streak in history:
Source: Creative Planning
There is another factor suggesting the bond market scare narrative is overdone. It relates to a measure called ‘term premia’.
This is an implied value that compensates investors for something called duration risk.
Term premia would be expected to rise if bond investors were increasingly concerned about US debt sustainability, but they do not appear to be driving it higher at the moment.
Write to Callum Newman at Mining.com.au
Main image: Unsplash
