“If you want to understand what’s happening in the economy, look at bonds,” begins today’s episode, where we explore how the bond market acts as a crystal ball for economic trends.

The bond market has been sending some clear signals lately. Interest rates remain elevated, with 10-year Treasury yields about 1 percent higher than their September 2024 low. After a challenging 2024 where bond returns flattened to just 1.18 percent, both the U.S. and U.K. are seeing historically high yields. We break down what’s driving these changes and explain key concepts like term premium — the extra return investors demand for holding longer-term bonds.

The Federal Reserve’s recent moves are shaping this landscape. After cutting rates by 1 percent between September and December 2024, Fed officials are now signaling a more cautious approach, wanting to see further inflation decline before considering additional cuts.

Then we explore why President William McKinley is suddenly relevant again. McKinley, whose term began in 1897, was known for his imperialist expansion and love of tariffs. His presidency marked the end of what historians call “the long 19th century” — a period from the French Revolution to World War I that transformed global society.

The episode then turns to what some are calling the “Cold Rush” — the race to claim influence in the rapidly changing Arctic. With ice melting four times faster than global averages and the potential for ice-free Arctic days by 2030, nations are competing for new shipping routes and access to resources. We examine three emerging paths: the Northern Sea Route along Russia’s coast, the North-West Passage along North America, and the Transpolar Sea Route across the North Pole.

Finally, we dive into an overlooked story: the global tax war. In 2021, 136 countries agreed to establish a 15 percent minimum corporate tax rate to prevent profit-shifting to tax havens. While the U.S. already exceeds this minimum with its 21 percent domestic rate, implementation faces challenges due to different methodologies for calculating tax bases and recent political developments that could affect its future.

Resources mentioned:

The Fed – The Treasury Tantrum of 2023

Will the True Treasury Term Premium Please Stand Up? | PIMCO

The Employment Situation – January 2025

What Everyone Gets Wrong About the 4% Rule | Bill Bengen, Father of the 4 Percent Rule and MIT Grad

Why William McKinley’s tariff policy, lauded by Trump, isn’t what it seems : The Indicator from Planet Money : NPR

How the Largest Bond Funds Did in 2024 | Morningstar

The Arctic: climate change’s great economic opportunity

Greenland: what is China doing there and why? | Presence before power

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#580: Treasury Tantrums, Arctic Routes, and McKinley’s Ghost