The bond market has a message about inflation, and most pros think the Fed is moving too slow to get ahead of it.
57% of the 101 investors in the latest Markets Pulse survey say 30-year Treasury yields will finish the year at or above 5% - a level the long end has touched only a handful of times in the last decade.
The 30-year sits around 4.90% right now, after briefly clearing 5% last month when the Iran war sent oil higher and pushed long yields to a near two-decade high.
Long yields don't just live in bond markets - they set the floor for mortgage rates, corporate borrowing costs, and what the government pays on its debt. A 5% handle on the 30-year shows up across all of it.
Think of the 30-year yield as the bond market's read on inflation years from now. When it stays high, it means investors aren't buying the idea that price pressures will fade on their own.
Fed Chair Kevin Warsh didn't help the case for lower yields. In his first press conference running the central bank, he ruled out softening the Fed's 2% inflation target and promised to deliver price stability - even with President Trump pushing publicly for rate cuts.
Half of Fed policymakers now see at least one quarter-point rate hike before year-end, sending short-term yields higher while long-term yields barely moved.
If you want this kind of read on the market every morning, join 350,000+ investors reading Market Briefs - you also get a 45-minute investing masterclass thrown in as a bonus.
More than two in five survey respondents say the dollar is the biggest winner from higher long-end yields. The logic is simple - when US bonds pay more, global money flows in to buy them, and those investors have to buy dollars first.
That dynamic is already in motion - the dollar just posted its biggest two-day jump since late March.
"Dollar strength on the back of the Fed's hawkish hold overwhelmed any negative pressure," said Jane Foley, head of FX strategy at Rabobank. She thinks the run has more room as long as US economic data holds up.
Survey participants also expect stocks and short-term Treasury yields to start moving in the same direction again - a relationship now near its most broken point in a decade. One trader said markets are simply worn out from war-driven swings and ready for central bank policy to take the wheel again.
The survey ran after the Fed meeting, so it reflects what investors think now that Warsh has shown his hand. Watch the 30-year - if it pushes back through 5% and stays there, the survey's bet on a Fed that's behind the curve starts looking right, and the squeeze on borrowing costs across the economy gets tighter from here.
Market Briefs breaks down what moves like this actually mean for your portfolio - five minutes a day, plus a free investing masterclass when you sign up.