The Bond Bull Market Is Over… Here's Why
Adam Taggart | Thoughtful Money® Aug 3, 2026
Summary
Dr Lacy Hunt argues the decades-long bond bull market is over because all three drivers of long-term Treasury yields now point higher.
He builds the case on the Fisher equation (which splits a long-term yield into real rate, inflation expectations, and term premium).
He expects inflation to settle into a 3.5-4.5% range, well above the roughly 1.5-2.5% regime that ran from 1990 to 2020.
Citing historian Niall Ferguson, he flags government interest expense exceeding military spending as a decline signal that also lifts the term premium.
He is positioned defensively — fund duration under one year, Treasury bills not bonds — while expecting a volatile trend toward higher yields.
Adam Taggart's takeaways
- Top takeaway Frames the interview around the thesis that the bond bull market is over and presses the guest on whether his rate outlook is unfriendly to bond prices.
- Seeks confirmation that the guest's fund will stay in bills rather than bonds for the foreseeable future unless something major changes.
Lacy Hunt's takeaways
- Top takeaway Argues that all three components of the Fisher equation — the real rate, inflationary expectations and the risk premium — now point to higher long-term Treasury rates.
- Expects inflation, which ran between 1.5% and 2.5% for a long time, to move gradually into a 3.5%–4.5% range over time.
- Cites economic historian Neil Ferguson's finding that great powers decline once interest expense outweighs military spending, and argues rising interest expense signals uncorrected fiscal problems that will raise the risk premium.
- Sees a coming period of capital shortage lifting the real rate, and expects far more volatility than the 1990–2020 era — volatility that itself demands a larger term premium.
- Allows that a recession, a deceleration in monetary growth or scaled-back quantitative easing, or a favorable supply shock could temporarily interrupt the upward trend in rates.