The DeFi Report What is the bond market telling us?
23 snips
Feb 18, 2026 They unpack bond market signals like a standout 30‑year auction, falling real yields, and an odd two‑year yield vs Fed funds. They compare narrow stock breadth and MAG7 concentration to late 90s parallels while noting key differences. They steel‑man the bullish AI capex and tax refund narratives. They also explore Bitcoin as a potential liquidity canary and discuss heavy cash portfolio positioning.
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Long-Bond Demand Is Flashing A Phase Shift
- The 30-year Treasury auction showed unusually strong demand, signaling a shift toward bonds as investors expect growth to slow and inflation to cool.
- Michael Nadeau interprets low primary-dealer take and a 2.66 bid-to-cover as an early phase shift toward risk-off positioning.
Two-Year Yield Below Fed Funds Is A Warning
- The two-year yield falling below the Fed funds rate signals the market views policy as restrictive and anticipates rate cuts.
- Nadeau warns a faster drop would push markets to price rapid Fed cuts and increase volatility.
Equity Breadth Is Diverging Around MAG7
- US equity breadth is diverging: indices rise while fewer stocks participate, driven by MAG7 concentration.
- Nadeau sees similarities to late-1999 breadth and concentration, though today's MAG7 are more profitable and mature.