MacroVoices · Thursday, August 13, 2026
Michael Howe suggests that rising bond yields globally, driven by strong nominal GDP growth, will force the Federal Reserve to increase policy interest rates. He believes the Fed cannot easily resist this trend, especially with limited available tools.
“if bond yields are rising, which they clearly are, and I would argue that that rising bond yield, which is a global phenomenon with the exception of China, is all about strong nominal GDP growth.”
“the plain fact is that the Federal Reserve can't resist that, um, very easily. I mean, it can do various tricks, and they've already used up a lot of those tricks.”
“so barring some, um, some, you know, clever tricks from Scott Bessent, which could mean that a lot of the deficit is being funded at the margin by more and more bills, which you, higher interest rates, that must become a higher policy interest rates. That has to come.”